Tesla Inc (NASDAQ:TSLA) stock is headed for a 28-month low as futures point to a further decline today to follow the 11% tumble Tuesday in a sell-off analysts at Wedbush described as "eye popping" and only likely to end by a concerted number of actions by currently "asleep-at-the-wheel" boss Elon Musk and the company's board.
In pre-market trading on Wednesday, Tesla shares were heading for a 3% fall to below US$106 for the first time since mid-August 2020.
Yesterday's lurch lower followed reports that an extended production shutdown in China for January could be on the cards.
Tesla is also expected to miss reduced Wall Street estimates for the fourth quarter and needs to lower its sights for 2023, based on higher inventory levels, recent price cuts, and overall production slowdowns in China, said Wedbush analyst, Dan Ives.
"With China the core linchpin to the Tesla bull thesis, worries are growing around what the softening demand picture looks like for 2023 given the dark macro clouds and increasing domestic EV competition," said Ives in a note to clients.
Fourth-quarter delivery units are now likely to hit somewhere between 410,000 to 415,000, Ives added, down from his prior 450,000 estimate and below the Street 'whisper numbers' at around 435,000.
"The reality is that after a Cinderella story demand environment since 2018 Tesla is facing some serious macro and company-specific EV competitive headwinds into 2023 that are starting to emerge both in the US and China," he said.
Ives noted that at the same time Tesla is facing a "Category 5 storm", with cuts to prices and with inventory starting to build globally in the face of an expected global recession, Musk is viewed as "asleep at the wheel" as he focuses on his new toy of Twitter Inc (NYSE:TWTR).
The Wedbush analyst noted: "From the boy that cried wolf approach around Musk is done selling stock (said it again on Twitter spaces last week) to the firestorm on Twitter that only gets worse and not better by the day. In essence, Musk has lost credibility with the broader investment community ... [which] has led to a complete debacle for the stock."
"In this risk-off market with jitters on the Street, the absolute last thing the Street wants to see is this Musk soap opera play out on the world stage with Tesla investors/bulls feeling like Rocky Balboa on a daily basis," he added.
Ives said he and his colleagues will only believe the stock has 'bottomed' if Musk refocuss back on Tesla, genuinely stops selling stock, the board initiates a buyback, and 2023 guidance is set at a conservative level on the earnings call in January.
"However, any further Musk strategic missteps will be carefully scrutinized by the Street and further weigh on shares," he concluded.
The Wedbush analysts maintained an 'outperform' rating and US$175 stock price target on Tesla.