Baird has added Tesla (NASDAQ:TSLA) as a Bearish Fresh Pick, citing “near-term headwinds” related to production challenges and demand uncertainty.
“Intra-quarter sales data from TSLA’s key regions lead us to believe there is risk to the consensus Q1 delivery estimate of 437.5K,” Baird stated.
The analysts pointed to “production downtime associated with the Model Y refresh” as a key risk factor.
“We estimate that ~300K Model Ys are delivered in a typical quarter, and the downtime adds risk to the Q1 total,” they wrote, noting that CEO Elon Musk had previously flagged this issue on Tesla’s Q4 earnings call.
Baird’s updated Q1 delivery estimate is 369.4K, well below the 437.5K consensus.
Adding to concerns, the firm says sales data from key markets has been weak. “Intra-quarter sales data from Europe, the US, and most recently China have reported notable y/y sales declines,” Baird noted.
In China, February deliveries fell 49% year-on-year, according to the China Passenger Car Association (CPCA).
The analysts also highlighted “key man risk” related to Musk’s broader political and cryptocurrency involvement.
“We believe Musk’s involvement with DOGE and the Trump administration broadly may affect some buyers in the US and Europe, which complicates the setup from a demand perspective,” they wrote.
Despite near-term caution, Baird remains long-term positive on Tesla due to “long-dated initiatives such as the launch of the Optimus robot, robotaxi service/expanding FSD, and ramping sales of the more affordable vehicle(s).”
Baird lowered its price target to $370 from $440, saying this valuation reflects a “premium to large-cap, high-growth peers” due to Tesla’s growth potential.
