Tesla stock has had a rough week — here’s what’s next for the electric vehicle maker

Shares of Tesla ( TSLA ) ended the week down 4% on Friday as the electric vehicle maker missed Wall Street estimates for third-quarter deliveries, issued a recall and discontinued a lower-priced model.

Electric vehicle maker Elon Musk shipped 462,890 electric vehicles in the three months ended September 30. While that was just a hair behind the 463,897 expected by Wall Street, disappointed investors sent Tesla shares down more than 3 percent following Wednesday’s report. The slight miss marked the fourth straight quarter in which Tesla missed analysts’ forecasts.

The saga continued Thursday, when the stock fell another 3 percent after Tesla quietly discontinued its cheapest EV model. Wedbush’s Dan Ives said the discontinuation of its Model 3 sedan was aimed at removing the last vestige of Tesla’s reliance on auto parts made in China amid rising trade tensions. The Model 3 Standard Range Rear-Wheel Drive was the last of Tesla’s vehicles to use lithium iron phosphate (LFP) batteries sourced from China, Ives said. Just two years ago, about half of Tesla’s electric vehicles used the cheaper LFP batteries.

Separately, Tesla has issued its fifth recall for Cybertrucks this year. Tesla has recalled more than 27,000 silver spaceship-like electric vans because of problems with rearview cameras that did not meet federal safety standards.

The tough week comes as Tesla has faced a number of major issues over the past year — from safety concerns over its Autopilot feature and mass recalls to factory closings, layoffs and increased competition in China. Three senior Tesla executives resigned this spring, and Bloomerg announced Thursday that its longtime chief information officer, Nagesh Saldi, will also leave the company.

Shares rose 4% at the close on Friday as a strong September jobs report lifted the market.

Tesla shares have been on a wild ride, falling after a dismal first-quarter earnings report in April, then rebounding in July when Tesla did better than expected in the next earnings period thanks to price cuts.

Now all eyes are on Tesla’s upcoming robotaxi event, which will either cement Elon Musk’s reputation as an AI leader or cast doubt on his lofty goals.

In an upbeat note to investors on Friday, Wedbush’s Ives said: “We believe Robotaxi Day will be (a) seminal and historic day for Musk and Tesla and marks a new chapter of growth around the future of autonomous, FSD and AI at Tesla”.

“We continue to believe that Tesla is the most undervalued AI name on the market, and we expect that Musk & Co. to unveil a ‘game-changing’ autonomous technology at this event next week,” he added. Ives is among the 44 percent of Wall Street analysts who recommend buying the stock. He sees the stock rising to $300 in the next 12 months, much higher than the consensus estimate of about $217, according to Bloomberg data.

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RBC analyst Tom Narayan told Yahoo Finance that while he has high hopes for a self-driving robot future, the event is unlikely to send Tesla shares higher.

“I think it’s difficult to get excited about a stock at such a high level,” he said, noting that the launch will showcase Tesla’s overall vision for AI and autonomous vehicles — a vision he says will likely take several years to to become “financially significant” for the electric vehicle manufacturer.

Narayan believes Tesla’s fast-growing energy storage business will be another big boon for the company, as well as Tesla’s sale of electric vehicle credits that he says could generate “billions” next year.

JPMorgan ( JPM ) analysts have a more cautious outlook on Tesla, giving it an Underperform rating. While Tesla’s third-quarter deliveries were not far below Wall Street’s recent forecasts, JPMorgan noted that deliveries were far from the numbers projected by analysts just a few years ago, before tempering its expectations. In October 2022, JPMorgan said, analysts predicted Tesla would ship 651,000 electric vehicles — about 29 percent more than the company reported for the period.

And its autonomous vehicle dreams may face barriers to mainstream acceptance. Efforts by companies to integrate self-driving taxis into city traffic have so far gone haywire. Waymo, owned by Alphabet ( GOOG ), was investigated by the federal government after accidents and traffic violations this spring, and in June the company recalled its fleet of nearly 700 driverless cars. Cruise, owned by General Motors (GM), suspended operations last year when a driverless cab hit a pedestrian and dragged her 20 feet.

JPMorgan on Thursday cut its full-year guidance for Tesla’s earnings per share to $0.60 from $0.64, adding that its weak third-quarter performance means Tesla could face its first year in that deliveries will not increase. They said that due to a continued disconnect between Tesla’s fundamentals and stock market hype, a lack of deliveries in 2024 would be “another contributing factor to causing more investors to pay more attention to the gap still higher of fundamentals and valuation,” rather than “any kind of ‘ah ha’ moment” when the stock goes down.

Laura Bratton is a reporter for Yahoo Finance.

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