Tesla (TSLA) Faces Delivery Slump as Wells Fargo Sticks With $120 Price Target
Tesla, Inc. (NASDAQ:) is one of the 10 AI Stocks on Wall Street's Radar. On June 10, Wells Fargo reiterated an 'Underweight' rating on the stock with a $120 price target. The firm is sticking with its underweight rating, stating that the company's Q2 deliveries are 'on track for another poor quarter.'
'Most of TSLA May delivery results are now out. Once again, global deliveries are trending meaningfully weaker, with May trending 23% lower y/y and Q2 QTD trending 21% lower y/y. All three key regions are double-digit % lower, with EU the worst.'
North America, Europe, and China— Tesla's key regions— have been experiencing double-digit percentage declines, the firm noted, further revealing that the 'fundamentals of the core auto business continue to weaken.'
It further said that 'order' pricing on the website appears stable over the LTM,' but 'aggressive financing promotions continue to act as price cuts.' This, coupled with lower leverage, is a risk to Q2 margins.
Attention is now being diverted to Austin Robotaxi deployment on June 12, which the firm doubts 'the likely limited debut will be enough to overshadow the poor fundamentals.'
The firm also pointed toward China, Tesla's second-largest market, which is 'trending 22% lower QTD.' The firm asserted how the 'competition in China is beginning to take its toll on TSLA's business,' as local OEMs like BYD (SZ:002594) and Chery 'continue to undercut TSLA on pricing.'
While we acknowledge the potential of TSLA as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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