{"id":11119,"date":"2023-12-05T17:58:20","date_gmt":"2023-12-05T17:58:20","guid":{"rendered":"https:\/\/connectwithfund.com\/markets\/with-little-revenue-expected-cybertruck-could-dunk-tesla-stock\/"},"modified":"2023-12-05T17:58:21","modified_gmt":"2023-12-05T17:58:21","slug":"with-little-revenue-expected-cybertruck-could-dunk-tesla-stock","status":"publish","type":"post","link":"https:\/\/connectwithfund.com\/?p=11119","title":{"rendered":"With Little Revenue Expected, Cybertruck Could Dunk Tesla Stock"},"content":{"rendered":"<div>\n<p>Four years ago Tesla promised a Cybertruck with a 500 mile battery range priced at $39,900, according to <em data-ga-track=\"ExternalLink:https:\/\/www.wired.com\/story\/tesla-cybertruck-success-failure\/\">Wired<\/em>.<\/p>\n<p>On November 30, Tesla laid an egg \u2014 announcing a base Cybertruck with 50% less range \u2014 250 miles \u2014 priced at $60,990, noted <em>Wired,<\/em> which is 53% above the amount promised in November 2019.<\/p>\n<p>With two million \u201creservationists\u201d \u2014 who paid $100 to preorder the Cybertruck \u2014 many questions come to mind:<\/p>\n<ul>\n<li>How many reservationists will ultimately buy what looks to be a gigantic disappointment for anyone who wants to use the vehicle for more than showing off?<\/li>\n<li>Will buyer disappointment translate into lower than expected Cybertruck revenue for Tesla?<\/li>\n<li>Does the 43% fall from Tesla\u2019s peak stock price mean the EV-maker\u2019s shares are now bargain priced?<\/li>\n<\/ul>\n<p>I do not know how many people will ultimately buy the Cybertruck. My \u201cbase case\u201d scenario is Tesla would generate $2.4 billion in Cybertruck revenue in 2024 and $6.1 billion in 2025.<\/p>\n<p>That is short of Morgan Stanley\u2019s<fbs-ticker data-name=\"MS\" data-href=\"https:\/\/www.forbes.com\/companies\/morgan-stanley\" data-type=\"stock\"><br \/>\n  MS<br \/>\n <\/fbs-ticker> estimate which I calculate to be $2.7 billion in 2024 revenue and $6.6 billion in 2025.<\/p>\n<p><fbs-ad position=\"inread\" progressive=\"\" ad-id=\"article-0-inread\" aria-hidden=\"true\" role=\"presentation\"><\/fbs-ad><\/p>\n<p>The investment bank estimates the Cybertruck will generate a tiny fraction of Tesla\u2019s revenue. \u201cBy 2025, we forecast Cybertruck will account for less than 5% of Tesla revenues and closer to 0% of profit,\u201d reported the <em data-ga-track=\"ExternalLink:https:\/\/www.ft.com\/content\/550f50b2-237a-4a03-8f5c-e140ca5f8aed\">Financial Times<\/em><em>.<\/em><\/p>\n<p>In the absence of some other growth catalyst, Tesla stock could keep falling further from its $407 a share peak reached in early November 2021.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Tesla\u2019s Cybertruck Launch<\/h2>\n<p>The Cybtertruck Tesla announced November 30 was more expensive than promised with less range. Yet its design \u2014 which largely met expectations \u2014 appeared poised to put pedestrians at risk, according to <em data-ga-track=\"ExternalLink:https:\/\/usa.streetsblog.org\/2023\/12\/02\/how-to-build-a-car-that-kills-people-cybertruck-edition\">Streetsblog<\/em>.<\/p>\n<p>Here are some key Cybertruck features:<\/p>\n<ul>\n<li><strong>Design: \u201cApocalypse-bunker-on-wheels.\u201d <\/strong>Social media compared the Cybertruck\u2019s design to \u201ca roided-out Blade Runner jalopy and an industrial refrigerator,\u201d noted <em>Streetsblog<\/em><\/li>\n<li><strong>Elevated body. <\/strong>Despite sporting an automatic pedestrian detection system, the Cybertruck\u2019s hood is at chest level for the six-foot-tall Tesla CEO Elon Musk and includes an \u201cAdaptive Air Suspension\u201d that lifts the vehicle another 10.4 inches, <em>Streetsblog<\/em> reported.<\/li>\n<li><strong>Battering ram on wheels. <\/strong>The Cybertruck\u2019s blunt flat front end, thick \u201darmor\u201d windshield glass and stainless steel edges are so sharp that its approval for sale in Europe is unlikely, noted <em>Streetsblog<\/em>.<\/li>\n<li><strong>Blinding light, fast acceleration. <\/strong>The Cybertruck has one giant headlight with a single bar of light which could blind oncoming drivers as it accelerates from \u201czero to 60 miles per hour in 2.6 seconds, which, if true, would mean it has a faster acceleration than most NASCAR and Formula 1 vehicles, with none of the accompanying engine roar to warn anyone that it&#8217;s coming,\u201d <em>Streetsblog <\/em>wrote.<\/li>\n<\/ul>\n<p>Finally, the Cybertruck\u2019s stainless steel body raises significant quality issues. The ultra-hard stainless steel Tesla is using for the Cybertruck\u2019s outer shell has proven hard to bend and manipulate, according to the <em data-ga-track=\"ExternalLink:https:\/\/www.wsj.com\/business\/autos\/behind-teslas-challenges-in-making-the-cybertruck-ultrahard-stainless-steel-8cb4c1b9\">Wall Street Journal<\/em><em>. <\/em><\/p>\n<p>Tesla has been challenged to \u201cshape the material into body panels that line up correctly and don\u2019t result in large gaps when installed.. and it is so hard and strong that it can be difficult to flatten,\u201d the <em>Journal<\/em> noted.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Cybertruck Revenue Estimate<\/h2>\n<p>Many reservationists are likely to cancel their orders. In addition, Tesla could have problems meeting its production targets. Moreover, Tesla rivals offer compelling alternatives to the Cybertruck.<\/p>\n<h3 class=\"subhead3-embed color-body bg-base font-accent font-size text-align\">Optimistic Scenario<\/h3>\n<p>My optimistic scenario is for Tesla to sell $4.6 billion worth of Cybertrucks in 2024 and $15.3 billion in 2025. Here are the assumptions I used:<\/p>\n<ul>\n<li><strong>Average Cybertruck price paid: $61,000.<\/strong><\/li>\n<li><strong>2024 deliveries: 75,000 <\/strong>which Bernstein considers \u201cambitious,\u201d according to <em>Fortune.<\/em><\/li>\n<li><strong>2025 deliveries: 250,000 <\/strong>according to Musk, <em>Fortune<\/em> noted.<\/li>\n<\/ul>\n<p>Of course Musk has warned about Cybertruck production difficulties. \u201cI do want to emphasize that there will be enormous challenges in reaching volume production with the Cybertruck,\u201d Musk told investors in October.<\/p>\n<h3 class=\"subhead3-embed color-body bg-base font-accent font-size text-align\">Base Case Scenario<\/h3>\n<p>Since Bernstein and Musk views these numbers as optimistic, it could be more realistic to expect lower deliveries while keeping the same assumption about the price.<\/p>\n<p>Specifically, my base case scenario yields Cybertruck revenues of $2.4 billion in 2024 and $6.1 billion in 2025 \u2014 by assuming the following:<\/p>\n<ul>\n<li><strong>2024 deliveries: 40,000.<\/strong><\/li>\n<li><strong>2025 deliveries: 100,000.<\/strong><\/li>\n<\/ul>\n<p>Some reservationists on a Reddit forum are unhappy. The Cybertruck Reddit forum \u201chas some very disappointed customers,\u201d according to <em data-ga-track=\"ExternalLink:https:\/\/www.vice.com\/en\/article\/4a35ed\/the-cybertruck-is-a-disappointment-even-to-cybertruck-superfans\">Vice<\/em><em>. <\/em>Zack Nelson, who attended the Cybertruck unveiling and operates a YouTube channel JerryRigEverything, said the delivery event \u201cleft many attendees confused and disappointed,\u201d according to <em>Business Insider. <\/em><\/p>\n<p>While some people are likely to buy the Cybertruck despite these feelings, Tesla faces competition from rivals supplying less expensive battery-powered trucks. These include Ford\u2019s $49,000 F-150 Lightning, the battery-powered version of the truck that has dominated the pickup segment for decades; GM which will soon roll out its $52,000 electric Chevy Silverado, and Stellantis \u2014 preparing to offer a $58,000 RAM 1500 REV, according to <em>Wired<\/em>.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">What Should Tesla Investors Do?<\/h2>\n<p>Morgan Stanley anticipates fewer Cybertruck shipments than my base case scenario does. \u201cWe forecast 50 deliveries in FY23 followed by 30,000 units in FY24 and 78,000 units in FY25. Our ATP assumption starts at $90k and falls to $84k by 2025,\u201d reported the <em>Financial Times.<\/em><\/p>\n<p>What new products does Tesla have beyond the Cybertruck? <em>Fortune<\/em> says Tesla has \u201ca product problem.\u201d With some of the tax credit for Tesla\u2019s Model 3 expiring in 2024, effective prices for EVs will rise at a time when many consumers are feeling squeezed.<\/p>\n<p>My guess is Tesla\u2019s stock has further to fall.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.forbes.com\/sites\/petercohan\/2023\/12\/05\/with-little-revenue-expected-cybertruck-could-dunk-tesla-stock\/\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Four years ago Tesla promised a Cybertruck with a 500 mile battery range priced at $39,900, according to Wired. On November 30, Tesla laid an egg \u2014 announcing a base Cybertruck with 50% less range \u2014 250 miles \u2014 priced at $60,990, noted Wired, which is 53% above the amount promised in November 2019. With two million \u201creservationists\u201d \u2014 who paid $100 to preorder the Cybertruck \u2014 many questions come to mind: How many reservationists will ultimately buy what looks to be a gigantic disappointment for anyone who wants to use the vehicle for more than showing off? Will buyer<\/p>\n","protected":false},"author":1,"featured_media":11120,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[],"class_list":["post-11119","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>With Little Revenue Expected, Cybertruck Could Dunk Tesla Stock | ConnectWithFund<\/title>\n<meta name=\"description\" content=\"Four years ago Tesla promised a Cybertruck with a 500 mile battery range priced at $39,900, according to Wired. 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