Tesla is disappointing investors because it doesn't have a $25,000 car: analyst

Tesla could be leaving a lot of money on the table over the next decade if it can't get a $25,000 electric vehicle to market.

"Expanding into lower price volume segments will be critical to support the company's growth outlook as we move into the middle part of the decade," said Guggenheim analyst Ali Faghri in a research note Thursday.

On Wednesday, Tesla CEO Elon Musk shot down the potential for a $25,000 car this year as it focuses resources on the rollout of full-self driving technologies and secures scarce semiconductors for higher priced models such as the Model 3 and Model Y.

Explained Musk, "We're not currently working on that $25,000 car. We at some point will. We have enough on our plate right now, too much on our plates, frankly. So at some point there will be, but I think that's sort of a question that it's just sort of the wrong question. Really the thing that overwhelmingly matters is when is the car autonomous."

Robots appear to be more of a focus inside Tesla than a $25,000 car.

Traders let Musk know of their letdown coming off the earnings call. Shares plunged 7.6% to $864 on the session as Tesla said its business would be weighed down by supply chain challenges, mostly as it relates to semiconductor shortages. The company also said it would not unveil any new models this year, let alone a $25,000 EV.

"Overall, while we continue to have an above consensus volume and margin outlook in 2022/'23, and assign a premium tech-skewed valuation multiple (~35x EBITDA), that is still not enough for us to recommend the stock at this time," added Faghri.

Here is how Tesla performed compared to Wall Street analyst estimates:

  • Revenue: $17.719 billion vs. $16.64 billion expected

  • Adjusted earnings per share: $2.54 vs. $2.37 expected

Suffice it to say, the Wall Street bulls on Tesla generally remained unshaken in their enthusiasm for the stock despite any perceived earnings call disappointment.

"Our message to investors is that Tesla is still a ‘must own’ in the sense that owning the stock is partially an insurance policy/hedge to allow different expressions of EV bets in your portfolio (both positive and negative bets). Not owning Tesla means you run the risk of not owning the one company that could make all other EV-related stocks in your portfolio potentially obsolete," said Morgan Stanley auto analyst Adam Jonas.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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