Tesla (NASDAQ: TSLA) is scheduled to start preliminary deliveries of the Cybertruck (pictured above) by the end of the month. However, an analyst suggests that Tesla should consider abandoning the highly anticipated vehicle.
Jefferies analyst Philippe Houchois decreased his company’s price target on TSLA from $250 to $210. Houchois believes that canceling the Cybertruck will likely have a positive impact on Tesla’s shares. A focus on the high-end, futuristic Cybertruck will prevent Tesla from competing with European automakers on affordable EVs.
Tesla’s stock experienced a slight decline on Monday. Despite this, it has seen a significant increase in November leading up to Cybertruck sales starting on November 30th.
Tesla reported lower-than-expected Q3 earnings and revenue, with CEO Elon Musk cautioning investors about the Cybertruck and the overall economy. While initial deliveries will begin soon, Musk estimated that it will take at least 12–18 months for the Cybertruck to become a significant cash flow contributor.
Tesla aims to produce around 250,000 Cybertruck units per year by 2025. Morgan Stanley analyst Adam Jonas suggests monitoring specific indicators to assess whether the decline in Tesla stock is stabilizing.
According to Jonas, Tesla needs to improve its performance in meeting the consensus earnings per share (EPS) estimates. It also needs to demonstrate that its business model is shifting towards licensing, software, and other products with relevance beyond the auto industry.
The Cybertruck continues to disappoint, even with the announcement of the launch date. Only 10 Cybertrucks will be sold at the November 30 launch, far fewer than expected. Multiple industry watchers are convinced that the Cybertruck will need to be totally revamped in order to become a commercial success.
Tesla aims to deliver 1.8 million vehicles in 2023. At the end of Q3, it had delivered about 1.3 million vehicles globally for the year, according to Investors Business Daily. The company needs to deliver 480,000 vehicles in Q4 to meet its target.
Despite near-term growth challenges, Tesla’s stock has performed well in 2023, surpassing the broader S&P 500 index.
Image Source: Sawyer Merritt