Bet the farm on struggling Tesla (TSLA) stock ahead of the company’s much-anticipated earnings report on Wednesday, claims Canaccord Genuity analyst George Gianarikas.
“Buy [Tesla stock] — it’s pretty easy,” Gianarikas said on Yahoo Finance Live (video above). “The stock had a pretty bad 2022 in terms of performance. This was based on several things, and some would attribute it to Elon Musk’s rants on Twitter. We believe this had a lot to do with the demand situation impacting Tesla, first in China and later to other parts of the world including the United States. People know that. A lot of that seems priced into the stock.”
The bullish call on Tesla — which has become a rarity on the street in recent months — contradicts a host of warning signals about the automaker’s fundamentals.
Tesla reported delivery growth of 39% for 2022, which missed analyst estimates by a wide margin and fell below the company’s own guidance of 50%.
And earlier this month, Tesla reduced the price of the base Model 3 by $3,000 to $43,990 and the Model 3 Performance by $9,000 to $53,990 in the US. The Model Y Long Range was priced down $13,000 to $52,990, while the Performance model was cut to $56,990, about $13,000 cheaper than the previous price.
The US rebates follow recent price cuts in China, Japan and South Korea as Tesla seeks to rekindle demand amid growing competitive threats.
Gianarikas said he believes the price cuts will boost demand, even as it weighs on profit margins. The analyst is also bullish on increasing margins for Tesla by selling more software upgrades to customers.
Customers remove the cloth covering their new Chinese-made Model Y compact crossover vehicle at a Tesla showroom in Shanghai, China, 18 January 2021. (Photo by VCG/VCG via Getty Images)
Still, Tesla stock has plummeted 54% over the past year, unhelped by Elon Musk’s chaotic tenure as Twitter owner.
“Quite simply, this is a fork in the road for Tesla that will either lay the foundation for its next growth chapter OR continue its descent from the top of the pole with Musk leading the way down,” Wedbush analyst Dan told Ives Clients on a more bearish note this month. “Now is the time for Musk’s leadership to lead Tesla through this period of weaker demand in a darker macro, and NOT the time to stay hands off what the street perception is like.”
The story goes on
Brian Sozzi is a freelance writer and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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