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5 key issues that must be addressed on Tesla's upcoming analyst call for the stock to avoid even 'darker days,' Wedbush says

Filip De Mott   

5 key issues that must be addressed on Tesla's upcoming analyst call for the stock to avoid even 'darker days,' Wedbush says
  • Tesla's conference call on Tuesday is a pivotal moment for the EV maker, says Wedbush Securities.
  • The firm says it's an opportunity to fix the gloomy narrative that's clouding over the company.

Tesla's coming conference call will be a pivotal in terms of deciding where the company goes next, and Wedbush Securities' Dan Ives says it's one the most crucial points in the company's history.

The crossroads come amid the company's dramatic 40%-plus stock slide this year. Past months have presented a swarm of issues for the electric vehicle maker, ranging from slumping deliveries to leadership controversies centered on CEO Elon Musk.

Most recently, analysts on Wall Street have been balking at the company's pivot away from the low-cost Model 2 vehicle it was expected to start mass-producing. They're not sold on Tesla instead dedicating itself to autonomous driving and robotaxis.

"While we have seen much more tenuous times in the Tesla story going back to 2015, 2018, 2020..this time is clearly a bit different as for the first time many long time Tesla believers are giving up on the story and throwing in the white towel," Ives wrote in a Friday note.

To him, Tuesday's conference call is an opportunity for the EV firm to correct course, as long as it's able to address five key points.

"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," Ives wrote.

First, Tesla needs a response to the negative growth trend that's developing within China, where homegrown firms such as BYD are chipping away Tesla's share of Chinese demand.

The company will need to detail its strategy for how to regain this key market, and remain competitive against rival competitors — both offshore and domestic.

Second, Tesla's must offer realistic and clear guidance for its growth, margins, and free cash flow. Otherwise, this remains a "guessing game" for analysts and fuels uncertainty, Ives warned.

Third, clarity on whether Tesla is still developing the Model 2 car needs to happen. Confusion first started when Reuters reported that the company would ditch these plans to instead create a robotaxi platform, which Musk later denied.

"If Tesla does not come out with a Model 2 the next 12 to 18 months the second growth wave will not come. Trading in Model 2 for robotaxis would be a tragic gamble in our opinion as full autonomy we do not see until 2030 for the industry," Ives said.

Fourth, it's time for Tesla to address its plans around artificial intelligence, and end uncertainty as to whether these initiatives will even remain in Tesla's domain. That's after Musk threatened to pull these projects outside of the company, unless he receives a 25% ownership stake in the firm.

Finally, Tesla needs to show-off these developments, by announcing an "AI day."

"The AI story, autonomous, FSD, Optimus, robots is another major value to the Tesla story but it's all behind closed doors," Ives said. "The Street needs to understand the roadmap, monetization, and overall strategy for the AI story at Tesla which right now is getting no credit for its AI endeavors."