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- GLJ Research CEO Gordon Johnson says Tesla’s growth is far from “transformational” given price cuts.
- Johnson holds a $67 price target on shares of the EV manufacturer.
- Tesla had just 2% sequential sales growth in the first quarter despite selling more cars than ever.
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Tesla stock is soaring after it posted record quarterly delivery figures and landed continued support from analysts, but not everyone on the Street believes in the electric-vehicle maker.
GLJ Research CEO Gordon Johnson told CNBC on Monday that he wasn’t impressed by Tesla’s recent delivery figures. The CEO holds a $67 price target on shares of the EV leader.
In an interview with CNBC’s Morgan Brennan and Loup Ventures’ Gene Munster, Johnson argued that Tesla was “barely growing” despite price cuts.
The stock research chief said that “year-over-year growth is irrelevant” at Tesla because of changing sales patterns and a Chinese rollout. He added that the EV maker turned in just 2% sequential growth from the fourth quarter to the first quarter.
Johnson said Tesla “picked the low-hanging fruit of entering the world’s largest three auto markets – US, China, Europe – and their sales grew just 2% quarter-over-quarter, despite 15 price cuts in the first quarter of this year, 18 price cuts total last year, and 52,500 more cars of capacity sold.”
Johnson added that Tesla sold “significantly less higher-margin Model S and X cars in the quarter and significantly more lower-margin Model 3 and Y cars in the quarter.” According to the CEO, that could mean a $300 million to $500 million hit to the company’s bottom line.
“So you’re looking at a company, a high-growth company, that’s barely growing, that’s losing more money doing so, and it’s going to see all of its credit sales disappear next year,” Johnson said, adding, “We see that as a big problem.”
Johnson also compared Tesla to Volkswagen, arguing that Tesla’s valuation doesn’t make any sense in relation to its peers. Tesla sold 184,000 cars in the first quarter and is valued at close to $700 billion, while Volkswagen sells about 2.5 million cars a quarter and is valued at roughly $160 billion.
Some have said Tesla’s valuation is based on its growth. But with the EV maker growing sales at just 2% sequentially, Johnson said he doesn’t “know what people are talking about when they say this is transformational growth.”
Munster said he thought it was unfair to look at sequential growth because the first quarter is “a seasonally light quarter.”
Munster added that while he thinks competition is the biggest risk to Tesla, as long as “the value of the car exceeds the competition,” Tesla will be able to “continue to have a measurable piece of a massive addressable market.”
In a note over the weekend, Dan Ives of Wedbush upgraded Tesla to “outperform” and tagged a $1,000 price target on the EV giant. The analyst said he expected a roughly $10,000 credit “to catalyze EV consumer demand.”
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