With a quarter-over-quarter recovery in auto sales and channel inventory reduction, Tesla (NASDAQ:) appears to be successfully executing critical strategies to maintain business health, Oppenheimer analysts said in a note.
They believe that bullish investors will highlight the strength of energy storage sales, which are expected to exceed $3 billion in the quarter. Also, the potential for Tesla’s Model 3 refresh and the introduction of the Model 2 could help the company return to vehicle growth as it transitions to AI and Full Self-Driving (FSD) technology as its key value and growth driver.
“We believe bears remain focused on margins and valuation while remaining skeptical about AI/FSD monetization,” analysts said.
“We believe the value of the FSD/AI platform is key to whether stocks will continue to rise or moderate again,” she added.
The investment firm continues to view Tesla as a leading technology company in FSD and AI in the physical world, but notes that the company’s strategy to monetize FSD remains uncertain, and its valuation is still a subject of debate is.
They expect more details on Tesla’s plans during its Q2 24 earnings call.
If Tesla continues with its current subscription model for FSD, Oppenheimer analysts forecast $0.60-$0.85 in GAAP EPS for every 5 million FSD users, based on a $99/month subscription fee and 35%-50% net margins. For reference, Tesla has sold approximately 6.3 million vehicles to date.
For a potential robotaxi fleet model, which would require further commercialization of self-driving technology, analysts estimate $0.40-$0.90 in GAAP EPS for every 100,000 vehicles, assuming a driver replacement value of $0.60/mile, a 40% occupancy rate -60% and 35%-50% net margins.
