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Despite Tesla's (TSLA) first quarter earnings missing estimates on the top and bottom lines, Barclays senior autos analyst Dan Levy says the results were "net positive" for the stock.
Levy joins Morning Brief with Madison Mills and Brad Smith to explain how he's weighing the potential of the Tesla narrative with the company's weak fundamentals, comparing sentiment around the stock to that of bitcoin (BTC-USD).
To watch more expert insights and analysis on the latest market action, check out more Morning Brief here.
I guess Dan just help me understand you said something fascinating that you're you're keeping yourselves equal weight but you acknowledge that this is probably net net positive. I can't imagine someone telling me they're net positive on a stock after some of the numbers that we have seen on this print. Walk me through what is it about this print that makes those dismal numbers easy to look through? What am I missing?
Well, I think this gets to the fundamental question of how do you evaluate stock between fundamentals and narrative, right? And the pendulum is constantly swinging back and forth. At some point, weak fundamentals should play a role. You know just to give you a sense, our EPS estimate for 2025 now is now roughly $1.68. This is into the year, consensus was north of $3. We thought that this could be a growth year, and in fact, with the tariffs with weaker top line, it's a challenge. But, I think we all know that Tesla is not a stock that you pick your, you know, one or two year out EPS number and apply a regular multiple. This is much more about narrative. This is much more about excitement. Um, it's a comp to Bitcoin, right? That Bitcoin is something we always say is the closest comp. And, um, as far as the narrative goes, what we got last night was it held in okay. Um, and that's why net net on this result in the very immediate term, it's probably net positive.
As we're seeing some of as well, the kind of net positive price targets that are out there from some of the largest bulls in Tesla, from what you were mentioning a moment ago, and even the thought process around how Tesla could even be in the same neighborhood as an investment perhaps um the I don't want to say thesis, but the investment mindset that would even permeate around Bitcoin, that would say that Tesla is only able to get back to some of those most bullish price targets if there is a purely risk on narrative that re-enters into the market. And maybe that's the wrong evaluation, but I'd love to know your thought process around what Tesla needs in order to actually reach some of those targets that are starting to be set forth by the largest bulls out there on the street.
Yeah. It's a couple things, and I think you raise a good point. Definitely, a risk on environment, an environment that's more engaging of speculative assets helps. This is what we saw with the stock rally, uh, late last year where it was completely disconnected from fundamentals and in fact, anything fundamentals deteriorated on the margins, right? Um, you know, so a risk on environment certainly helps. Look, I think over time, these growth opportunities do need to be judged. So we have to see where we are in terms of, okay, are they actually scaling on robo taxi and autonomous? Is Optimus actually materializing into something that's helping them? Um, these are the areas where we have to see how this all plays out over time, and maybe that can help, but I think it's that plus, as you mentioned, um, you know, returning to more of a risk on environment.