Tesla Stock Drops. Its Analyst Meeting Lacked One Important Thing.

Tesla Stock

Tesla (NASDAQ:TSLA) -5.85%  hosted its highly anticipated, and long, analyst and investor meeting Wednesday. There was a lot to digest: Topics ranged from energy physics to manufacturing. But the meeting lacked something important, and the stock slumped Thursday.

Shares closed down 5.9% Thursday at $190.90. The S&P 500SPX +0.76%  and Nasdaq CompositeCOMP +0.73% rose 0.8% and 0.7%, respectively.

Investors walked away with two main messages. First, Tesla (ticker: TSLA) demonstrated its leadership team is more than just Elon Musk. In the past, Tesla events featured mainly Musk along with CFO Zachary Kirkhorn and senior vice president Drew Baglino. This time, many executives presented details about Tesla’s software, supply chain, and manufacturing.

Second, Tesla demonstrated how it plans to scale into a company with the ability to make up to 20 million cars a year in the future. Plans for materials and manufacturing—along with charging technology and infrastructure—all focused on scaling rapidly with reducing costs.

There was a lot to like, but “no $25,000 car yet,” wrote Wedbush analyst Dan Ives in a Thursday report.

Tesla had an image of its next-generation platform, a more affordable EV that will be built at a Mexican assembly plant, but it was literally under wraps under the presentation slide. Investors were probably hoping for a prototype or more details about when the car would hit the roads.

What Else Happened

Musk said there would be a vehicle launch event in the future to discuss details. That left investors having to guess when the car might arrive, based on when the Mexican plant—announced Wednesday—would be making cars. That could be around the end of 2024 based on how fast Tesla has built capacity in the past.

“While there were no specific details for the lowered price next-generation Tesla…which will cause a knee-jerk modest selloff this morning, the stage is set for this car to be produced and scaled globally,” added Ives. He is still bullish on Tesla stock, rating the share as Buy. His price target is $225 a share.

Canaccord analyst George Gianarikas felt similarly to Ives after the meeting.

“The event was devoid of product unveils,” wrote Gianarikas in a Thursday report—and devoid of financial targets and what he described as “one more thing,” which was a reference to how Steve Jobs used to handle Apple AAPL +0.41%  (AAPL) meetings.

“It did, nonetheless, leave us much to noodle on,” he said. Gianarikas came away with an increased conviction that Tesla can continue to grow and build its competitive advantage in the EV industry.

Gianarikas rates the shares Buy, too. His price target is $275 a share.

“Tesla’s mission is to promote and help the world transition to a sustainable future and for Tesla, this means providing energy storage, renewable solutions, and making electric vehicles,” wrote RBC analyst Tom Narayan in a Wednesday report following the meeting. While the next EV was discussed a lot, Narayan also noted in his report that Tesla reiterated its plan to eventually build 1 terawatt hour of annual battery capacity.

The prefix tera- is for trillion, while the giga- prefix investors are familiar with is for billion. Tesla makes roughly 40-gigawatt hours of batteries each year. So its goal is to expand that capacity by about 25 times. Those batteries will power EVs but also be used in Tesla’s stationary power business.

Narayan rates the shares Buy and has a $223 price target for the stock.

The meeting wasn’t all about words (A transcript of the event was 20 pages long and ran to almost 13,000 words.) Those in attendance at the event in Austin, Texas were also able to tour the plant. “We have had the opportunity to visit the Fremont factory dozens of times,” wrote Baird analyst Ben Kallo in a Thursday report. “Austin shows how Tesla’s newest factories built from a blank slate are more capital efficient across the entire factory.”

He believes Tesla is increasingly setting itself apart from electric-vehicle rivals when it comes to its competitive and cost advantages. Kallo calls Tesla stock his “best pick,” rating shares as Buy. His price target is $252 a share. Not everyone is a Tesla bull, like those four analysts. GLJ Research Gordon Johnson rates shares Sell. His target price is just $24.33 a share.

“The company’s first analyst day, did not (as many have speculated for months): (1) reveal a new Tesla model, (2) specify a date for the repeatedly delayed Cybertruck, (3) introduce a more affordable EV…or (4) announce anything around the company’s past robotaxi plans,” wrote Johnson in a Thursday report. “Instead, it was three hours of vagaries.” He wasn’t impressed and would have preferred more financial detail from CFO Kirkhorn about the coming year.

Overall, 65% of analysts covering Tesla rate shares Buy. The average Buy-rating ratio for stocks in the S&P is about 58%.

Featured Image: Unsplash @ Charlie Deets

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