Tesla's Strategic Moves Drive Quarter-Over-Quarter Recovery in Vehicle Sales, Oppenheimer Analysts Say
In a recent note, Oppenheimer analysts praised Tesla's successful execution of critical strategies to maintain business health, leading to a quarter-over-quarter recovery in vehicle sales and a reduction of inventory in the channel. The analysts believe that bullish investors will be impressed by the strength in energy storage sales, projected to surpass $3 billion in the quarter. Additionally, the potential for Tesla's Model 3 refresh and the introduction of Model 2 could drive the company back to vehicle growth as it pivots towards AI and Full Self-Driving (FSD) technology as its primary value and growth driver.
Despite these positive developments, bears remain focused on margins and valuation while expressing skepticism about AI/FSD monetization. The analysts emphasize that the value of Tesla's FSD/AI platform will determine whether shares continue to rise or start to plateau.
While Oppenheimer views Tesla as a leading technology company in FSD and AI, they note that the company's strategy for monetizing FSD is still uncertain and its valuation is a topic of debate. More details on Tesla's plans are expected during the 2Q24 earnings call.
In terms of potential financial impacts, Oppenheimer analysts project that Tesla's current subscription model for FSD could result in $0.60-$0.85 in GAAP EPS for every 5 million FSD users, based on a $99/month subscription fee and 35%-50% net margins. They also estimate that a robotaxi fleet model, dependent on further commercialization of driverless technology, could yield $0.40-$0.90 in GAAP EPS for every 100,000 vehicles, assuming a $0.60/mile driver replacement value, 40%-60% utilization, and 35%-50% net margins.
In conclusion, Tesla's strategic moves and focus on FSD and AI technology are positioning the company for potential growth and success. Investors should pay attention to upcoming earnings calls for more insights into Tesla's future plans and potential financial outcomes.