Tesla is poised to rally 13% this year as China deliveries pop after latest price cuts, Wedbush says
- Tesla stock is poised to gain 13% this year, as deliveries will surge on the latest price cuts.
- The EV maker slashed prices for its key models in China, which is expected to boost demand.
Tesla stock is poised to rally 13% this year, as the electric vehicle maker's China deliveries are set to pop after the latest price cuts, according to Wedbush.
The firm reiterated its price target for Tesla shares, predicting its stock would notch $225 a share by year-end. In particular, analysts pointed to Tesla's recent price cuts in response to faltering vehicle demand last year, leading the company to slash prices twice on its Model 3 and Model Y in China.
Those discounts have already been a huge driver of sales, analyst Dan Ives previously said, pointing to Wedbush's survey that found 70% of 500 surveyed EV customers in China said they were positively influenced by the price cuts to buy a Tesla this year.
The firm estimated that Tesla's first quarter deliveries would hit at least 420,000 for all models, with 402,000 stemming from sales of the Model Y and Model 3 alone. That's slightly above the rate needed for the company to notch 1.8 million total deliveries in 2023.
"We believe Tesla has been aggressive and strategic about its Model Y/3 price actions which have paid major dividends so far this quarter around gaining market and mind share from domestic players," Wedbush analysts said in a note on Wednesday. "The macro remains uncertain and a recession could likely be on the doorstep, however Tesla is now positioned well with its price points with demand outstripping supply so far in 2023."
Tesla stock has soared 76% since the start of the year, a stark turnaround from its dismal performance in 2022. The EV maker lost 65% and wiped out $700 billion in its market cap amid rising inflation and higher interest rates, marking 2022 as the stock's worst year ever. That led Wedbush to remove Tesla from its Best Ideas list in November, though it has been bullish on the EV maker this year.