Tesla moved lower in early Tuesday trading after a top Wall Street analyst issued a bullish note on the electric-vehicle group’s near-term prospects but added a dash of caution tied to the risks it faces in achieving its broader ambitions.
Tesla (TSLA) shares, which surged more than 60% from the November elections to the end of the year on bets that CEO Elon Musk’s close ties with President-elect Donald Trump might result in favorable policies, have been largely muted since the start of the year.
The group posted modestly weaker-than-expected fourth quarter delivery figures last week, which included a record end-December rally but the first overall annual sales decline on record despite solid gains in China and price cuts in major markets around the world.
On the plus side, however, Tesla also deployed a record 11 gigawatt hours (GWh) of energy storage over the fourth quarter, a 244% increase from the prior year period that took its 2024 total to another all-time high of 31.5 GWh.
Tesla CEO Elon Musk has said a low-priced EV would be “pointless” if it wasn’t made to be fully autonomous.
The group is slated to post its detailed fourth quarter earnings after the close of trading on Jan. 29, with analysts looking for a bottom line of 72 cents a share on revenue of $27.23 billion. Gross profit margins, meanwhile, are forecast to widen modestly to 18.85%, according to LSEG data.
BofA sees Tesla execution risk
Investors are likely to be focused on the group’s robotaxi rollout, its plans for a low-priced EV that could be launched later in the year and the ramp of its Optmus robotics platform.
Bank of America analyst John Murphy, however, argues that Tesla’s post-election rally pegs the stock at a level that “captures much of our base case long-term potential from core autos, robotaxi, Optimus, and energy generation and storage.”
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Murphy downgraded Tesla to ‘neutral’ from ‘buy’ in a note published Tuesday, citing execution risks for the group’s broader ambitions, but boosted his price target by $90 to $490 per share to allow for last year’s rally.
“Since our upgrade in April 2024, news flow and investor sentiment have shifted more positively,” Murphy and his team wrote. “Catalysts around future growth drivers have been more fully recognized (most notably for Robotaxi).”
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Murphy added a list of catalysts that could support the share price over the next twelve months, but added caveats to the market’s base case new policy initiatives from the Trump administration may be “less favorable for Tesla than expected.”
Robotaxis key to Tesla outlook
In terms of upside potential, however, he cited the likely introduction of lower-priced EV later this year (a move that Musk has said would be “pointless” unless it was designed to be fully autonomous) as well as the launch of the group’s new robotaxi.
“With this sizable cost advantage, Tesla’s robotaxi service could offer rides at a much lower price to the consumer and still have higher margins,” Murphy and his team wrote.
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Murphy also sees positive catalysts from the energy storage business, and the ramp of production at its Shanghai gigafactory, as well as updates on full-self driving technologies that are planned for rollout in major markets over the coming months.
He added that a “potential capital raise, which could help accelerate growth” is another potential share price driver.
Tesla shares were marked 1.72% lower in premarket trading to indicate an opening bell price of $404.02 each.
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