Tesla Below $150: What Comes Next, According to Canaccord

Tesla (NASDAQ:TSLA) is going through a tough patch. On the back of ongoing share losses (40% year-to-date), the stock has hit 52-week lows, with sentiment depressed after Q1 deliveries were a bit of a disaster. Meanwhile, the overall story is that margins have been taking a notable hit on account of vehicle price cuts. And more recently, the company announced more than a 10% cull to the workforce as it tries to get a grip on its new reality.

So, the bears have knives out, and even Tesla bull Canaccord’s George Gianarikas’ first thought when hearing of the layoffs was “whoa, margins must have been terrible in 1Q24.”

Digging beneath the layoffs headline and taking a closer look at what they represent, it is evident to Gianarikas that the company is now “contending with a period of slower growth — slower than they may have thought even at the beginning of 2024.”

At the same time the layoffs were announced, so were the departures of top execs, one of them being that of SVP of Powertrain and Energy Drew Baglino. Admittedly, says Gianarikas, these were a “bit of a body blow,” and bring to mind the exit of other notable names such as CFO Zach Kirkhorn (2023) and Chief Technical Officer/Co-Founder JB Straubel (in 2019, although he currently sits on Tesla’s Board of Directors). “Baglino has been a strong contributor,” concedes Gianarikas. “Time will tell what the reasons behind his departure were.”

So, that’s the bad stuff, although Gianarikas makes the case for the “not-so-bad” stuff too. The job cuts, says the analyst, are nothing new, with Tesla’s history littered with multiple layoffs, which according to CEO Elon Musk are needed for advancing to the next growth phase. “While the recent one may be on a larger absolute size relative to history — it doesn’t stick out that meaningfully on a percentage basis,” Gianarikas summed up.

All told, Gianarikas rates Tesla shares a Buy, while his $234 price target implies the shares will climb 56% higher over the coming months. (To watch Gianarikas’ track record, click here)

The Street’s average price target stands at a lower $184.86, but still represents one-year returns of 23%. Rating wise, most are staying on the sidelines for now; based on a mix of 19 Holds, 8 Buys and 7 Sells, the consensus view is that this stock is a Hold. (See Tesla stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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