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Tesla went from a Cinderella story to 'horror show': Analyst

Tesla (TSLA) has faced mounting challenges in 2024, garnering increasingly bearish sentiments from major shareholders. The EV maker's stock has fallen almost 40% year-to-date.

Wedbush Securities Managing Director Dan Ives recently put out a note claiming that "the clock has struck midnight" for Tesla CEO Elon Musk. He joins Yahoo Finance to discuss Tesla's recent performance and what the company's future may look like moving forward.

Ives elaborates on his stance: "This is really what I view when when I say 'clock striking midnight' — it comes down for Musk. Navigate the Category 5 storm just like he has in '18, 2020, and other. Otherwise, this is not just 'Trust me,"' because I think that's really the frustration now that, essentially, it went from a Cinderella story, magic carpet ride to what's been a bit of a horror show, especially the last three, four months."

For more expert insight and the latest market action, click here to watch this full episode.


This post was written by Nicholas Jacobino

Video transcript

SEANA SMITH: One analyst that we're going to talk to next still maintains his buy rating on Tesla. But says, that the clock is striking midnight for Elon Musk because of many of those reasons that you just listed.

So for more on that, we want to bring in Dan Ives of Wedbush Securities. Dan, it's great to see you here. So I was just going through your recent note that you put out this week. You're saying that the clock has struck midnight for Elon Musk that Tesla is going through a major, quote, "Category 5 storm" right now. Where do we go from here?

DAN IVES: I think we're going to find out Tuesday, because this is probably the worst period that I've seen, I'd say, in about six years for Tesla. And patience is wearing thin.

And you see from an investor perspective, and, obviously, many thrown in the towel, the long-term story is still there. And that's why we remain bullish. But no doubt, this is white knuckle. And there could be darker days ahead, if Musk does not handle the call, I think, like an adult in the room and actually give some vision and navigation with a lot of questions remaining.

MADISON MILLS: Dan, it's great to speak with you. Let's stick on this adult in the room concept, because a lot of the challenge here for Tesla is that the fundamentals don't always match up with what Elon Musk is purporting about deliveries and company fundamentals.

I know that you do a lot of traveling to Asia to take a look at what's going on beneath the hood for some of these manufacturers. What can you tell us from your experience on the ground that may not be making headlines or may not be making its way out of Elon Musk's mouth to investors?

DAN IVES: Look, right now, I can tell you firsthand, China EV market, it's like the video thriller, "Nightmare on Elm Street." Pick your spot. It's been bad.

Now, that's, obviously, been the huge headwind for Tesla, which is, really, that's a key part of the growth in terms of the China story. What I think investors need to hear is what's the strategy to turn this around.

Are they going to maintain prices? And the big thing is Model 2. You need Model 2 to have that growth story, the next 18, 24, 36 months. This cannot just be about autonomy five, six years from now.

And I think that's really the crucial point here that they need to get. And he needs to get on that conference call in terms of that point.

SEANA SMITH: Dan, what are you hearing or what are you expecting in terms of the timing of production of the Model 2? And if it doesn't happen according to plan, more specifically, what does that then downside risk look like?

DAN IVES: If they don't do Model 2 and went straight to autonomy, that'd be like being at a cliff in the Grand Canyon and looking down below. The point is, it's a scary proposition. Because when Tesla talks about two growth waves, the second wave is Model 2 refresh, Model 3, Model Y, and, obviously, some other models that they're going to introduce.

But that's the issue right now in terms of Model 2. You cannot go straight autonomy. Obviously, some reported it. And this is really what I view when I say clock striking midnight, it comes down from us. Navigate the category 5 storm, just like he has in '18, 2020, and other.

Otherwise, this is not just, trust me because, I think, that's really the frustration now that, essentially, went from a Cinderella story magic carpet ride to what's been a bit of a horror show, especially, the last three, four months.

MADISON MILLS: Well, analysts are-- and we're hearing from sources that the future of Tesla does really rely on cracking that driverless autonomy that you did mention. How likely is that?

DAN IVES: Look, autonomy is going to be key. But that's-- we're not really going to see driverless, no steering wheels 2030. And thinking about the regulatory involved here. So that sounds great on a PowerPoint and sci-fi in terms of what autonomy.

And we do believe in the autonomous vision. But in the near term, it's about growth. What is free cash flow look like? How do you reverse the growth trend? How do you get to three, four, five million units? The only way you get there is with a sub 30k car, Model 2.

For a product line that really hasn't had a refresh since Model Y, Cybertruck continues to be limited. That's not going to be mass market. And that's the issue here. This would almost be the equivalent of Apple being like, OK, iPhone 14, you're like iPhone 15, and iPhone 16. Hey, just wait until the iPhone 24. Stay tuned.

MADISON MILLS: That probably wouldn't work out too well for Apple side, Dan.

DAN IVES: No. But that's also the difference between a tactician, a Hall of Famer cook versus what we're seeing with Musk, which has really been like a comedy show, a bad comedy show the last few conference calls.