Buy Tesla stock ahead of earnings, analyst says

Bet the farm on battered shares of Tesla (TSLA) ahead of the company’s highly anticipated earnings report on Wednesday, argues Canaccord Genuity analyst George Gianarikas.

“To buy [Tesla stock] — it’s pretty simple,” Gianarikas said on Yahoo Finance Live (video above). “The stock had a pretty bad 2022 in terms of performance. That was based on multiple things, and some would attribute it to Elon Musk’s tirades on Twitter. We think it had a lot to do with the demand situation that affected Tesla, first in China and later it leaked to other parts of the world, including the United States. People know that. A lot of that seems to be priced into the share price.”

The bullish call on Tesla — which has become a rarity on the streets in recent months — goes against a host of red flags about the automaker’s fundamentals.

Tesla reported a delivery growth rate of 39% for 2022, which narrowly missed analyst estimates and fell below the company’s own guidance of 50%.

And earlier this month, Tesla cut the price of the Model 3 base version by $3,000 to $43,990 and the Model 3 Performance version by $9,000 to $53,990 in the U.S. As for the Model Y Long Range, the price dropped by $13,000 to $52,990 while the Performance model was reduced to $56,990, about $13,000 cheaper than the earlier price.

The rebates in the US follow on the heels of recent price cuts in China, Japan and South Korea as Tesla looks to boost demand against growing competitive threats.

Gianarikas said he believes the price cuts will fuel demand, even if it weighs on profit margins. The analyst is also positive about Tesla’s margin from selling more software upgrades to customers.

SHANGHAI, CHINA - JANUARY 18: Customers remove the canvas from their new Chinese-made Model Y compact crossover vehicle at a Tesla showroom on January 18, 2021 in Shanghai, China.  (Photo by VCG/VCG via Getty Images)

Customers remove the cloth from their new Chinese-made Model Y compact crossover vehicle at a Tesla showroom on January 18, 2021 in Shanghai, China. (Photo by VCG/VCG via Getty Images)

Yet Tesla stock is down 54% over the past year, not helped by Elon Musk’s chaotic tenure as owner of Twitter.

“Quite simply, this is a year with a fork in the road for Tesla that will either lay the groundwork for its next chapter of growth OR continue its descent from the top of the perch with Musk leading the way down,” Wedbush analyst Dan Ives said in a more bearish message to clients this month. “This is a time for Musk’s leadership to guide Tesla through this period of softer demand in a dark macro and NOT the time to be hands-off, as is the perception of the street.”

Brian Sozzi is editor-in-chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and further LinkedIn.

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