Goldman Sachs analysts have recently made a downward adjustment to Tesla’s price target, reducing it from $295 to $285 while maintaining a Neutral rating. The reason behind this decision is attributed to weaker sales performance across key markets, causing Tesla’s shares to trade at $284.70, reflecting a nearly 18% decrease over the past week.
The analysts highlighted declining sales data in the United States, Europe, and China as the primary factors influencing the revised outlook. In the U.S., Tesla’s deliveries through May saw a year-over-year decline in the mid-teens, according to data from Wards and Motor Intelligence. Similarly, in Europe, April registrations dropped by 50% year-over-year, with May showing a mid-20% decline. The China Passenger Car Association (CPCA) also reported a 20% decrease in May, despite a slight sequential increase from April.
Consumer surveys from HundredX and Morning Consult further supported Goldman Sachs’ decision to lower delivery and EPS forecasts for Tesla. The analysts now project Tesla’s second-quarter deliveries to range between 335,000 and 395,000 vehicles, with a base case estimate of 365,000, down from the previous forecast of 410,000 and below the Visible Alpha Consensus of 417,000.
Despite facing challenges in various regions, such as Germany and Spain, where sales have declined significantly, Tesla remains financially strong, with $95.7 billion in trailing twelve-month revenue and a market capitalization of $917 billion.
On a positive note, Tesla is strategically positioning itself by leveraging initiatives such as the Chinese government’s campaign to boost rural sales of the Model 3 and Model Y. This move could potentially help offset some of the losses incurred due to declining sales in other regions. Additionally, Tesla’s supply chain strategy, focused on vertical integration and battery sourcing at scale without relying on China, has been noted as a strength by analysts at Piper Sandler.
As Tesla continues to navigate through these delivery challenges, its commitment to innovation and supply chain resilience could prove instrumental in maintaining its competitive edge in the electric vehicle market despite facing short-term hurdles.