A lot has happened for Tesla stock in the past three days.
It began when Reuters reported Friday the EV giant has canceled its long promised next-generation $25,000 vehicle, choosing to focus on developing its self-driving robotaxi platform. Reuters, citing three anonymous sources and internal messages, wrote that Tesla no longer plans to make its low-cost entry-level vehicle, the Model 2, and will continue developing its robotaxi on the "same small-vehicle platform."
A source told Reuters that Chief Executive Elon Musk is going "all in" on robotaxi. Tesla stock sank on the report, hitting its 2024 low of 160.51 intraday Friday. However, TSLA began to pare losses after Musk took to X, formerly Twitter, alleging that Reuters "is lying (again)."
Then after the market closed Friday, Musk posted on X that the Tesla robotaxi will be unveiled on Aug. 8, 2024.
Over the weekend, speculation ran rampant about whether the Reuters was accurate and if Tesla would release its robotaxi and the cheaper Model 2 in August.
After falling 3.6% to 164.90 Friday, Tesla stock advanced 4.9% to 172.99 during market action Monday.
Tesla Stock, Robotaxi And Model 2 Chatter
Morgan Stanley analyst Adam Jonas, historically a Tesla bull, wrote late Friday that the Model 2 is "critical to the medium-term top-line growth narrative" for Tesla. Jonas has modeled that the next-generation vehicle accounts for more than 40% of incremental unit volume from 2024 to 2030.
"Model 2 may be a small part of the profit pool for Tesla, a pulling back from low-cost/high volume products would be negative to near-term sentiment and is potentially thesis-changing for many bulls," Jonas said.
The analyst added that some investors have interpreted the timing of the Reuters story with excitement around the latest version Tesla's full self-driving (FSD) program and scaling up of a Tesla robotaxi business ahead of schedule.
"While we do believe Tesla has advantages around developing the computer vision/robotics technologies necessary to be dominant in autonomous driving, we believe a host of legal/regulatory issues will make this journey measured in decades rather than years," Jonas wrote.
Canaccord Genuity analyst George Gianarikas wrote early Monday the firm does not believe Tesla has "completely scrapped its plans" and that it is modeling 100,000 next-generation vehicle units in 2026.
"Tesla is increasingly a bet on autonomy," Gianarikas said.
Troy Teslike, a respected source of delivery estimates and Tesla data tracking among retail Tesla investors, wrote on X Sunday that he wouldn't be surprised if Tesla "unveils two identical-looking vehicles" on Aug. 8.
"They might say production starts now for the robotaxi version but later for the compact car version," Teslike said.
Meanwhile, a video circulated on social media Sunday of Franz von Holzhausen, Tesla's chief designer, being asked about the status of the Model 2 and if it has been canceled.
"Stay tuned," Holzhausen said. "Don't always believe what you read."
What Musk Has Said
Tesla has long teased both its cheaper next-generation vehicle and its robotaxi ambitions.
Throughout 2023, Tesla said it continued to "make progress" on its next-generation platform. However, the EV company remained mostly silent on details about the vehicle.
In January, Tesla reported in its fourth-quarter earnings that its teams are working "on the launch of the next-generation vehicle at Gigafactory Texas" in 2024. Tesla had previously said it would first be produced in Mexico, at its new planned factory.
Tesla added it is also "currently between two major growth waves," with the "global expansion" of the Model 3 and Model Y vehicle platform "and the next one we believe will be initiated by the global expansion of the next-generation vehicle platform."
"We're very far along on our next generation low-cost vehicle," Elon Musk said on the Q4 earnings call.
Musk added in January that Tesla was looking to start production sometime in the second half of 2025. However, Musk cautioned his words should be "taken with a grain of salt."
However, it's unclear when the next-generation vehicle would begin deliveries. Elon Musk has promised "revolutionary" manufacturing to cut costs, but that could take a long time to develop.
Also, it's unclear if Tesla's next-gen EV will be eligible for Inflation Reduction Act (IRA) tax credits, depending on its battery sourcing. This could mean that with Tesla's current pricing, its other vehicle offerings could undercut the new "cheaper" compact vehicle.
Tesla Stock Performance
Last week, Tesla stock sank 6.2%, including a 3.6% dip Friday, to 164.90. Cathie Wood purchased nearly 453,000 shares of Tesla during the week, according to the daily trade disclosures. TSLA shares are trading below the 50-day moving average after falling around 13% in March. Tesla is the biggest loser on the S&P 500 index so far in 2024.
The prior week, Tesla gained 2.9% to 175.79 as the EV company started rolling out its latest full self-driving update to customers.
Emails sent by Elon Musk leaked on social media platforms show he is making it mandatory in North America to install and activate the latest version of FSD on vehicles and to take customers on a "short test ride before handing over the car."
Tesla is also offering a one-month free trial of FSD in the U.S. for new purchases or existing EVs that are FSD capable.
Tesla Stock Has Plunged In 2024, But At Least It's Cheaper, Right? Nope
Meanwhile, analyst consensus now has 2024 Tesla earnings firmly below 2023's level. That signals another year of earnings declines for this growth stock. Wall Street currently expects Tesla earnings per share of just $2.76 in 2024, according to FactSet. That would be more than a 13% decline vs. last year's $3.12.
Tesla reports first-quarter earnings and revenue on April 23.
Wall Street's 2024 EPS consensus estimates for Tesla have now come down more than 27% since the end of 2023. With Tesla reporting earnings on April 23, Wall Street is likely just beginning to cut earnings predictions. Some analysts believe earnings could drop even further, potentially around 2021 EPS of $2.26.
Looking further out, Wall Street consensus has Tesla's EPS in 2025 coming in at $3.79, down from $5.29 at the end of 2023, according to FactSet.
The EV giant ranks eighth in the 35-member IBD Auto Manufacturers industry group. The stock has a 32 Composite Rating out of a best-possible 99. Tesla stock also has a 9 Relative Strength Rating and a 67 EPS Rating.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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