CA - Tesla: Challenges Remain Despite Improving Narrative

2024-05-15 09:39:22 ET

Summary

• Q1 2024 earnings missed expectations, with revenues facing headwinds from deliveries and lower ASPs, while free cash flows missed by a significant margin.
• While positive that Tesla is bringing forward the launch of new models, this remains ambiguous, especially on the development of the true Model 2.
• Full self-driving, or FSD, is no longer constrained by infrastructure, FSD Version 12 seems to have positive feedback so far.
• While Tesla is currently in conversations with one major automaker about licensing FSD, a deal is likely not imminent.
• While Tesla shares rallied on media reports about Tesla having received conditional approval to deploy FSD in China, the details of this are not exactly clear yet.

Tesla, Inc. ( TSLA ) rallied more than 30% following earnings on hopes about its full self-drive, or FSD, new model launches, and more, but has since seen share price come down after the optimism faded away.

In the article below, I analyze Tesla's recent Q1 earnings release and share my views on the current opportunity, updating my valuation according....

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