Tesla
earnings,
released
after
the
market
close
on
Wednesday
night,
have
sent
shares
tumbling
in
Thursday’s
trading
session
Our
key
takeaway
from
the
Tesla (TSLA) earnings
call
was
the
firm’s
strategic
shift
to
the
development
and
ramp-up
of
the
new
affordable
sport
utility
vehicle,
while
focusing
on
cost
cuts
for
its
existing
vehicles.
This
marks
a
change
from
the
2023
strategy,
which
was
to
cut
prices
to
generate
strong
volume
growth.
We
updated
our
forecast
for
lower
near-term
deliveries
growth
and
lower
near-term
automotive
gross
profit
margins.
As
a
result,
we
reduce
our
fair
value
estimate
on
Tesla
stock
to
$200
per
share
from
$210.
We
maintain
our
narrow-moat
rating.
Tesla
shares
were
down
on
the
earnings.
We
think
the
market
reacted
negatively
to
management’s
outlook
that
Tesla
will
enter
a
period
of
lower
growth
in
2024.
At
current
prices,
we
view
shares
as
fairly
valued,
with
Tesla
stock
trading
a
little
below
our
updated
fair
value
estimate
but
in
3-star
territory.
Accordingly,
we
recommend
investors
wait
for
the
stock
to
offer
a
solid
margin
of
safety
before
considering
an
entry
point.
Tesla
Deliveries
Expected
to
Slow
This
strategic
shift
will
create
different
near-
and
long-term
dynamics
for
the
company’s
deliveries
growth.
In
the
near
term,
we
expect
deliveries
to
grow
at
just
10%
and
6%
in
2024
and
2025,
respectively.
This
is
far
below
the
50%-plus
annual
growth
that
Tesla
has
generated
over
the
past
decade.
However,
as
the
company
launches
its
affordable
vehicle
by
the
end
of
2025,
we
expect
Tesla
will
resume
double-digit
deliveries
growth
in
2026.
As
the
affordable
vehicle
surpasses
the
Model
3/Y
platform
in
deliveries,
we
forecast
Tesla
will
deliver
a
little
over
5
million
vehicles
by
2030.
We
expect
different
near-
and
long-term
profit
margins
as
well.
While
Tesla
is
developing
its
affordable
vehicle
and
ramping
up
Cybertruck
production,
we
expect
the
company
will
see
a
period
of
lower
automotive
gross
margins,
in
line
with
the
19%
generated
in
2023.
Over
the
long
term,
we
continue
to
forecast
margin
expansion
as
Tesla
begins
to
sell
its
affordable
vehicles
and
benefits
from
its
cost-reduction
initiative.
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