There is a palpable disconnect between the sentiment around Tesla shares, with retail investors overwhelmingly ecstatic regarding the ever-widening possible monetization avenues for the EV giant, contrasted sharply with the decidedly somber tone of Wall Street analysts and institutional investors.
Only a couple of weeks back, the resident Tesla permabull analyst at Morgan Stanley, Adam Jonas, was waxing poetical as to the $500 billion addition to Tesla's enterprise value courtesy of the EV giant's bespoke Dojo supercomputer.
A lunch with some prominent institutional investors last week, however, was apparently sufficient to disabuse Jonas of the traction of his bullish thesis on Tesla.
Investor sentiment is fairly negative going into this week’s 3Q $TSLA earnings and conference call, per MS Adam Jonas after hosting a lunch last week with several big investors (see note below).
1/ More price cuts likely in 2024 if Cytruck doesn’t ignite interest in TSLA… pic.twitter.com/dUmzykEYvO
— Gary Black (@garyblack00) October 16, 2023
In his latest investment note, Adam Jonas has conceded that the mood among institutional investors remains overwhelmingly cautious in relation to Tesla in general and the Cybertruck in particular, where teething issues are likely to prevent an aggressive production ramp-up well into 2024. Moreover, in the absence of a dedicated Cybertruck-related tailwind, many investors believe that the EV giant will have to continue to rely on additional price cuts to "clear inventory," as per the management's own comments during the April earnings call.
Bear in mind that Tesla missed consensus delivery expectations by around 5 percent in Q3 2023, disclosing quarterly deliveries of just around 435,000 units. On the bright side, Tesla's deliveries did exceed its quarterly production in Q3, which means that the EV giant managed to reduce its elevated inventory levels for the first time in a number of sequential quarters.
At the core of this perceived disconnect between institutional and retail investors, however, is a fundamental disagreement as to the viability of Tesla's additional monetization avenues. For instance, many institutional investors remain skeptical as to whether Tesla would be able to grow its earnings at all in 2024, with the impact of the Dojo supercomputer and the EV giant's AI/FSD-related efforts "difficult to quantify, and easy to ignore."
As this fundamental disagreement continues, Tesla has now officially launched an initial tier of an API for its EVs, with a paid tier expected to materialize in 2024. This move is the clearest sign yet that the EV giant is seeking to launch its own app store, opening a lucrative monetization avenue for its in-car platform.
Tesla is slated to announce its earnings for the third quarter of 2023 this Wednesday. The prevalent somber mood around Tesla might just work in the EV giant's favor though, given the lowered bar for the stock's outperformance.
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