Tesla can rebound with these 10 turnaround ideas: Wedbush

January 27, 2024 by admin 30 Comments

By Joey Klender

Posted on January 26, 2024

Tesla (NASDAQ: TSLA) can rebound with 10 turnaround ideas, according to a new note from Wedbush analyst Dan Ives.

Tesla reported Earnings for Q4 and Full Year 2023 on Wednesday, and after what was widely considered to be a weak conference call, the stock dropped over 12 percent on Thursday.

Dan Ives, an analyst at Wedbush who has been routinely bullish on the stock, was one of the most vocal personalities on Wall Street yesterday as varying ideas surrounding the narrative of the Earnings Call circulated.

Ives called the call a “train wreck,” and talked about the lack of information Tesla reported during Earnings. There was no indication of what investors should expect in terms of margins or outlook in production.

Instead, Tesla stated it expected a “notable” drop in growth rate in 2024 as it gears up for its next-generation platform, which it plans to launch in the second half of 2025.

“This was 101 how to not to do a conference call,” Ives commented on Thursday morning. Wedbush removed Tesla stock from its “Best Ideas List” as well.

Tesla Can Rebound with These 10 Things: Wedbush

However, Ives is back with a note on Friday, which he shared with investors. According to the analyst, there are ten ways Tesla can turn around its stock:

Announce a $10 Billion Share Buyback With Roughly $30 Billion of Cash on hand. Walk the walk, not just talk the talk and show confidence to investors
Create an “X Holding” Structure That Will Include AI Initiatives (Dojo, Optimus, FSD) to give Musk More Control and could get him to ~25% voting level
Stop the price cuts now and maintain margin leverage over other auto players
Hold an AI Day before the summer timeframe so investors can better understand the goals for Dojo, Optimus, FSD
Get outside capital for X/Twitter with assurances of no more Musk stock sales
New comp package with the proxy to lock in Musk as CEO Through 2030, along with settling Delaware legal issue holding things up
Hittable production/delivery timeline for Model 2 and sub $30k vehicle in 2025
With Zach (former CFO) gone, conference calls have been horror shows; return to formal guidance and goalposts and make messaging changes on calls
Do an aggressive AI acquisition spree and bring in outside capital to build out the AI component of Tesla…~$30 Billion of cash to fund deals
Give long-term targets around AI revenue to the Tesla ecosystem. We believe Tesla could be the biggest AI company in the world around FSD, autonomous, Dojo, Optimus, robotaxis…give this key AI framework to the Street/investors

Several of the ideas Ives lists would clarify some skepticism investors may hold after the Earnings Call.

One of the more notable things to recognize on the list is the price cut narrative, which investors continue to focus on. While they are great for consumers, they put pressure on Tesla’s profits, which is why it has continued to be so strong for years.

Additionally, offering CEO Elon Musk a new comp package could alleviate pressure on the stock from his comments last week, where he said he would be “uncomfortable” moving Tesla into more development of AI without greater control.

Elon Musk explains why he wants 25% voting share at Tesla: “I just want to be an effective steward of very powerful technology”

Ives reduced his price target on Tesla from $350 to $315 but still holds an ‘Outperform’ rating on the stock.

I’d love to hear from you! If you have any comments, concerns, or questions, please email me at joey@teslarati.com. You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.

Tesla can rebound with these 10 turnaround ideas: Wedbush