Tesla (TSLA) Chief Executive Elon Musk is under pressure to provide concrete plans to fix some major concerns that have been looming over its stock in next week’s earnings call, Wedbush analysts said Friday in a note to clients.
“If Musk is flippant again and there is no adult in the room on this conference call with no answers then darker days are ahead,” the Wedbush analysts said.
Tesla’s crucial conference call will take place Tuesday, April 23, after the market closes and after Tesla releases its Q1 earnings results.
The EV maker has several issues to address to its investors, most notably its negative growth trend in China where competition is becoming stiff, Wedbush said. Analysts from Morgan Stanley echo this sentiment, saying China may have already won the cheap EV race.
“New models are important for Tesla and we expect half a dozen or so different ‘shapes’ and form factors launched in the years ahead,” Morgan Stanley said in a note to its clients late Thursday.
Wedbush said if Tesla does not release its promised Model 2 in the next 12 to 18 months, “the second growth wave will not come.” Musk had been teasing a low-cost EV that would be the Model 2 for a while, but investors are yet to see any plans for it at all. The Tesla chief’s latest new model update was regarding the self-driving “robotaxi,” and Wedbush said it would be a “tragic gamble” to trade in Model 2 for full autonomy driving when the industry is not ready for it.
“Musk needs to recommit to the Model 2 strategy along with robotaxis, but it cannot be solely replaced by autonomy,” the Webush analysts wrote.
Both Wedbush and Morgan Stanley analysts said that Musk also has to clarify worries over his previous comment demanding 25% ownership of Tesla before expanding its AI and robotics efforts, or he would otherwise take such projects outside of Tesla. “This threat of Musk leaving the AI initiatives outside Tesla has been an overhang on the stock that must be alleviated for investors,” Wedbush wrote.
Wedbush maintained its outperform rating on the stock, saying it has always viewed Tesla as “one of the most disruptive companies in the world” but that it has to lay out a strategic plan for the future as soon as possible. Morgan Stanley also maintained its overweight rating on Tesla.