A 50% rebound from the low point unexpectedly met with bearish views! Fuguo Bank: Tesla's sales prospects are worrying, fundamentals are inferior to other "Seven Giants"
JPMorgan Chase & Co. has included Tesla in its third-quarter tactical short-selling stock list, believing that the stock may experience a decline in the near future. Tesla's delivery growth is expected to slow down, with a projected 14% decrease in delivery volume for the fiscal year 2024. JPMorgan Chase & Co. points out that Tesla's fundamentals are inferior to other "Big Seven" companies, with a higher P/E ratio and lower earnings growth expectations per share. Tesla is facing a slowdown in the US, EU, and Chinese markets, as well as increased competition pressure, making it more difficult to increase sales volume. Tesla also needs to address issues with robotaxi technology and pure vision FSD. Tesla's stock price rose by 6.05% on Monday
According to the financial news app Zhitong Finance, Fuguo Bank has included Tesla (TSLA.US) in its list of stocks to short in the third quarter, believing that the stock may experience a decline in the near future. Fuguo Bank has given Tesla a "reduce" rating, as the bank expects Tesla's delivery growth to slow down due to declining demand and the diminishing boost in sales from price cuts.
Analyst Colin Langan and his team at Fuguo Bank estimate that the gross margin of cars excluding credits will further decline due to potential additional price cuts and lower sales. Fuguo Bank forecasts Tesla's delivery volume for the fiscal year 2024 to be around 1.55 million vehicles, a year-on-year decrease of about 14%, which is approximately 13% lower than the general market expectation.
"We are still concerned about the slowdown trends in the three key regions (the United States, the European Union, and China) recently. Apart from pricing and model updates, there are hardly any means to increase sales, as the company has resorted to financing promotions, but the effect seems minimal. So far, the boost in sales from price cuts is diminishing."
Looking ahead, the penetration rate of electric vehicles in the United States and the European Union is leveling off, coupled with intense competition in the Chinese market, leaving Tesla with few means to increase sales. Fuguo Bank's analyst team is worried about the demand for Model 2 and the profit margin of a smaller mass-market model.
Fuguo Bank points out that Tesla's fundamentals are not as strong as the other "Magnificent Seven," with the stock currently trading at a price-to-earnings ratio of about 82 times, while the peer P/E ratio of the "Magnificent Seven" is around 35 times. Compared to the other "Magnificent Seven," the general expectation for Tesla's earnings growth over the next 3 years is lower. As for the dream of robotaxis, Fuguo Bank notes that experts believe this technology will still take a few years and are skeptical about pure vision FSD.
After Chinese electric vehicle companies released strong delivery reports for June, Tesla closed up 6.05% on Monday at $209.86. Tesla is set to announce its second-quarter delivery data on Tuesday, with Wall Street estimating deliveries of around 420,000 vehicles, marking a year-on-year decline for two consecutive quarters.
It is understood that following the Q1 earnings release on April 24, where Musk reiterated the importance of FSD and the acceleration of launching affordable models, Tesla experienced a strong rebound. As of the closing on July 1, Tesla had rebounded by nearly 50% over a period of more than two months