An industry analyst is making an interesting argument, suggesting that Tesla could benefit financially if it were to cancel the highly anticipated Cybertruck. Jefferies analyst Philippe Houchois has released a note to investors, stating that canceling the all-electric pickup truck could actually be a positive move for the company’s stock.
Houchois believes that the Cybertruck has already cost Tesla a year of potential growth in 2024 and that the automaker would be better off reallocating its capital to support residuals instead of launching the Cybertruck. He has adjusted his price target for Tesla to $210, based on reduced earnings and lower free cash flow projections.
While the note does acknowledge that Elon Musk, Tesla’s CEO, did mention during the recent Earnings Call that it would take 12-18 months to ramp up production of the Cybertruck, Houchois argues that this delay would prevent Tesla from capitalizing on the delays of its competitors, particularly as European legacy automakers plan to launch more affordable electric vehicles in the coming year.
However, it is important to note that even if the Cybertruck were to be canceled, Tesla would still be able to continue producing its popular Model 3 and Model Y vehicles. Additionally, the company will continue working on its next-generation vehicle line. The demand for Tesla vehicles remains strong, evidenced by the one million pre-orders for the Cybertruck.
While some may see the cancellation of the Cybertruck as a setback for Tesla, Houchois argues that it could actually help the company refocus on its original strengths of simplicity, scale, and speed. This, in turn, could potentially have a positive impact on the company’s shares.
It is worth mentioning that Tesla shares were down only slightly during Monday trading, and the stock has seen a notable increase over the past month and six months.
1. What is the Cybertruck?
The Cybertruck is an all-electric pickup truck developed by Tesla. It features a futuristic design and is known for its stainless steel exoskeleton and bulletproof windows.
2. Why does the analyst suggest canceling the Cybertruck?
The analyst suggests canceling the Cybertruck because they believe it has already cost Tesla a year of growth and that reallocating capital to other areas would be more beneficial for the company’s stock.
3. What is the current status of the Cybertruck?
As of now, the Cybertruck has received one million pre-orders, and deliveries are set to begin in the near future.