Why Tesla Stock Popped on Wednesday
Key Points
Two Wall Street analysts advise caution on Tesla ahead of earnings.
Tesla missed its deliveries target last week -- and is getting ready to spend heavily on AI chips.
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Tesla (NASDAQ: TSLA) stock jumped 7.6% through 12:35 p.m. ET Wednesday, one week before the electric car leader announces Q1 earnings results, and just minutes after two Wall Street analysts published cautious comments about what to expect from those results.
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Image source: Tesla.
What Wall Street says about Tesla
In back-to-back notes, Barclays and TD Cowen expressed caution over Tesla's upcoming earnings report.
Cowen lowered its price target to $490 a share, while maintaining a buy rating on the EV stock. Tesla is coming off a delivery miss, observes the analyst, and there's been no good news about Robotaxis to offset negative sentiment yet. Perversely, Cowen sees these two facts as potential positives for Tesla as they've lowered expectations heading into earnings.
Barclays is less optimistic. With just a $360 price target and only an equal-weight rating on Tesla, this analyst worries more about Tesla's spending plans for its new "Terafab" chip venture, musing that the cost of this effort could rise into the "mid-single digit trillion dollar range."
There's therefore the potential Tesla will blow right past previous forecasts for $20 billion in capital spending this year, eating into cash flow and destroying earnings.
What will Tesla earn?
That would be a crying shame, because as we round the corner into earnings, analysts were finally getting a bit optimistic about Tesla. Despite missing on deliveries last week (Tesla built 408,000 EVs in Q1, but sold only 358,000 of them), analysts are guiding investors to expect superb sales growth of 17% for the quarter ($22.6 billion or more) and a big jump in per-share profit to $0.38.
That's 41% more than Tesla earned a year ago, and would mark a nice turnaround for the stock.
Let's just hope Tesla doesn't blow all its money on AI chips.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
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