For electric vehicle titan Tesla (TSLA) , 2024 hasn’t been a banner year. Its stock has dropped 28% in 2024.
The world’s No. 1 EV seller has suffered from intensified competition in the market, especially from Chinese EV companies. That competition has forced Tesla to lower prices, depressing revenue.
The company’s auto-deliveries totaled 386,810 vehicles in the first quarter, down 8.5% from a year ago and 20% from the fourth quarter of 2023.
Revenue totaled $21.3 billion in the first quarter, down 9% from a year ago and 15% from the prior quarter.
Tesla’s Cybertruck debuted earlier this year to mixed reviews. In April, Tesla had to recall all units due to a defect that can render the accelerator pedal immobile when pressed all the way down.
Also, in April, Tesla denied reports that it had scrapped its plans for an inexpensive car after rumors suggested it was shelving it.
Oh, and the company announced 600 layoffs in May, including 500 responsible for installing charging stations.
That's not great news, especially for Cathie Wood, given Ark Investment Management is a major Tesla shareholder.
Paycheck for Elon Musk hinges on vote
The biggest issue for Tesla may be the fight over Chief Executive Elon Musk’s compensation. Tesla shareholders approved a $46 million package for Musk in 2018, but a judge rejected that payday because the process to approve it was flawed, she said.
Now, shareholders are voting again on the package, which is expected to finish on June 13. At this point, the result is unclear.
Morningstar analyst Seth Goldstein has a bullish view of the company. He assigns it a narrow moat, meaning he sees it as having competitive advantages lasting at least 10 years.
Related: Tesla analyst offers blunt warning on Elon Musk pay package vote
He puts the fair value for the stock at $200. It traded at $180 on Wednesday, June 12.
“Tesla is aiming to adjust its capital expenditures investment and operating expenses to match a period of slower revenue, profit, and free cash flow growth over the next couple of years,” Goldstein wrote in a commentary.
But he sees some good news ahead. “We think recent price cuts, the refreshed Model 3, and improved production at the Austin and Berlin factories should generate better sales through the rest of 2024.”
Cathie Wood unveils staggering Tesla outlook
Famed money manager Cathie Wood, head of Ark Investment Management, has sung the praise of Tesla and Musk for years. It’s the biggest holding in her flagship Ark Innovation ETF (ARKK) , worth $694.7 million as of June 12.
Unsurprisingly, she's bullish on Tesla's future. Wood updated her outlook for the company's stock price in a new report issued this week.
Ark’s base case is that Tesla shares will hit $2,600 in 2029, with a bull case of $3,100 and a bear case of $2,000. The base case is 14 times Tuesday’s quote, or a 71% annualized gain; the bull case is 17 times Tuesday’s quote; and the bear case is 11 times.
Previously, Wood was targeting $2,000 by 2027.
Related: Analyst predicts Tesla's Elon Musk may finally create Apple rival
Ark analysts are excited about Tesla’s robo-taxi plans. Musk has focused the company on that segment amid its slumping car sales and has said the robo-taxis will be unveiled in August.
“Nearly 90% of Tesla’s enterprise value and earnings will be attributed to the robo-taxi business in 2029,” the analysts wrote in a commentary.
Cars versus taxis
“Electric vehicles could approximate a quarter of total sales and about 10% of Tesla’s earnings potential, as we believe the robo-taxi business will have much higher margins.”
They predict Tesla will launch a robo-taxi service within two years and think the probability it fails to launch one within five years is almost zero.
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A failure to launch in five years would take $350 off the share price, the analysts said.
They are optimistic about Tesla’s vehicle production. “After a flat-to-up year in 2024, vehicle production increases 45% per year through year-end 2029,” they predicted.
“After this year, we expect that Tesla’s ability to scale will be a function of management bandwidth and Tesla’s ability to open new factories.”
Related: Veteran fund manager picks favorite stocks for 2024
