Wells Fargo Cuts Estimates on Tesla Ahead of Q3 Results

Wells Fargo analysts maintained their Equal Weight rating for Tesla (NASDAQ:TSLA) while reducing their price target from $265.00 to $260.00 in anticipation of the electric automaker's third-quarter report scheduled for October 18.

In the third quarter, Tesla reported deliveries of 435,000 vehicles, which fell short of the Street estimate by approximately 20,000 units. Wells Fargo forecasts that due to these lower delivery figures and continued price reductions, the automotive gross margin (excluding credits) for the third quarter is projected to be 16.3%, compared to the Street estimate of 17.9%.

Additionally, Wells Fargo expects average pricing in the third quarter to decrease by 20% from its peak levels, and the automotive gross profit per unit (excluding electric vehicle credits) to be halved compared to its highest point.

To account for these factors, Wells Fargo lowered its earnings per share (EPS) estimates for 2023 from $3.20 to $2.95, for 2024 from $3.55 to $3.25, for 2025 from $3.75 to $3.60, and for 2026 from $4.30 to $4.20, reflecting the impact of price reductions and lower delivery volumes.