Gary Zhou 
Key Points
- 📉 Jefferies analyst suggests that canceling the Cybertruck could be positive for Tesla’s stock.
- 💰 The analyst, Philippe Houchois, believes Tesla would benefit by using capital to support residuals instead of releasing the Cybertruck.
- 📉 Houchois cuts Tesla’s price target to $210, citing reduced earnings and lower free cash flow estimates.
- 🚗 The slow ramp of the Cybertruck is seen as a hindrance to Tesla’s growth in 2024, according to the analyst.
- 🌐 Despite potential drawbacks, Tesla CEO Elon Musk emphasizes ongoing production of Model 3, Model Y, and next-gen vehicles.
- 📈 Tesla shares were down slightly during Monday trading, but the stock has shown overall positive performance in the past month and six months.
An analyst is urging Tesla (NASDAQ: TSLA) to cancel the upcoming Cybertruck as they believe it “would probably be positive for shares.”
In a new note to investors, Jefferies analyst Philippe Houchois said that the Cybertruck has already cost Tesla a year of growth, speaking about 2024, and believes the automaker would be better off using capital to support residuals instead of releasing the all-electric pickup.
Houchois cut his price target to $210, based on reduced earnings and lower free cash flow estimates (via Street Insider):
“Tesla looks stuck in a slow lane for another 12-18 months, unable to capitalize on peer delays while European legacy OEMs launch $/€25k EVs next year and Chinese carmakers set a new pace of shorter product cycles.”
To be fair, CEO Elon Musk did say that the ramp of the Cybertruck would take 12-18 months during the most recent Earnings Call.
However, the ramp will not stop Tesla from producing its already mass-market Model 3 and Model Y, it will not stop the already-established next-generation vehicle line from being worked on over the next 18 months, and it won’t take away from the demand it already has for its vehicles.
Musk said investors should temper their expectations for the Cybertruck, but it also is a groundbreaking product that has 1 million pre-orders. That’s plenty of evidence for Tesla to keep the Cybertruck project in the works, especially as deliveries are set to begin a week from Thursday.
Houchois’ note says that Tesla has already lost a year of growth in 2024:
“With 2024 already a lost year for growth, it would help Tesla refocus on an edge that was built on simplicity, scale, and speed.”
This was the analyst’s argument for the Cybertruck being canceled, stating that it “would probably be positive for shares.”
At the time of writing, Tesla shares were down less than a dollar during Monday trading. The stock is up 7.98 percent over the past month and up 28.59 percent over the past six months.
