Some of the world’s biggest automakers are still struggling with parts shortages but that hasn’t stopped Tesla (TSLA) from delivering a record number of vehicles in Q1.
The EV leader delivered 310,000 units in the quarter, amounting to a 68% year-over-year increase, and coming in roughly in line with consensus expectations. Broken down, Model 3+Y deliveries hit 295,324, with Model S+X units accounting for 14,724 deliveries. Total production for Q1 came in at 305,407, slightly below 4Q21’s 305,800 units.
With fears the recent Covid lockdowns in China and the ongoing disruptions to the supply chain would take a bigger toll, Deutsche Bank analyst Emmanuel Rosner is “impressed with Tesla’s operational execution in the face of large industry supply-chain challenges, and with its pricing power which could enable it to more than offset steep raw materials pressure.”
The performance also sets Tesla apart from other leading automakers such as General Motors and Toyota, where the lack of key components were behind recent sales drops.
By taking advantage of its long-term contracts, robust purchasing power, and being able to “diversify” its battery chemistry to keep the use of expensive inputs to a minimum, Rosner thinks the company is “well positioned to deal with current macro challenges.”
What’s more, with the Berlin and Texas factories up and running and further adding to Tesla’s production abilities, Rosner continues to expect “strong” Tesla volumes this year.
“The 1.24m+ unit annualized production achieved in 1Q22 represents a solid start to 2022,” Rosner summed up, while also noting that this should keep the company “on track” to deliver ~1.5 million units in 2022.
To this end, Rosner maintains a Buy rating on Tesla shares, backed by a $1,200 price target. Should the figure be met, investors are looking at upside of ~15% from current levels. (To watch Rosner’s track record, click here)
According to the rest of the Street, however, the shares are currently trading above their fair value; going by the average price target of $1,015 and change, the stock will stay rang-bound in the coming months. (See Tesla stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Anyone who's been stuck in a traffic jam for any length of time appreciates the value of the autonomous vehicle. Communications company leader Qualcomm (QCOM) is part of the drive to get us there.
That drive just got a little easier thanks to a new acquisition the company's making. Between its current line of smartphone-heavy business, and its new potential push into driverless cars, the end result is reason to be bullish on Qualcomm.
The last year for Qualcomm has featured a major upward thrust followed by a slow decline to more “normal” levels. From April 2021 to nearly November, the company held to a fairly tight range between $120 and $150 per share. November saw a substantial upward spike that proved unsustainable, and now the company is back around the $140 range once more.
The latest news might get Qualcomm back up past those spike levels. The company concluded its efforts to acquire Arriver, the self-driving vehicle arm of Veoneer. With Arriver in its fold, Qualcomm will be better able to compete against Intel's (INTC) Mobileye, currently regarded as a leader in the industry.
Wall Street's TakeTurning to Wall Street, Qualcomm has a Moderate Buy consensus rating. That's based on 12 Buys and five Holds assigned in the past three months. The average Qualcomm price target of $216.88 implies 55.7% upside potential.
Analyst price targets range from a low of $185 per share to a high of $250 per share.
Hedge Funds Losing Faith, but Dividends Inspire HopeRight now, hedge funds are significantly less interested in Qualcomm than they once were. The word from the TipRanks 13-F Tracker shows that, once more, hedge funds have reduced their stake in Qualcomm by about two million shares last quarter.
This is a return to form for hedge fund appraisal of Qualcomm; hedge funds had sold shares in Qualcomm from March 2020 straight on to June 2021. The first increase in hedge fund stakes took place in September 2021, but December 2021's departure saw a further reduction in stake.
However, for income investors, Qualcomm offers a welcome dividend. Qualcomm's dividend history shows just what dividend stock investors like to see: a dividend that regularly increases, and has been doing so over the last four years.
Even during 2020 and the worst of the COVID-19 restrictions, Qualcomm maintained, and even raised, its dividend.
Qualcomm Needs HelpGranted, the autonomous vehicle market has been rough for its entrants in the last few years. Even Elon Musk noted that actually getting an autonomous vehicle to market was a “hard problem.”
Given the sheer range and extent of the problems Tesla (TSLA) has seen in that vein, it's not surprising that actually getting such a car out is proving a taller order than most expect.
Worse yet for Qualcomm, there are signs that smartphones aren't quite as ubiquitous as they once were. The “dumbphone” is making something of a comeback. “Dumbphones” are basically the cell phones that most had back in the 2000 to around 2010 range.
Dumbphone sales were on track to hit one billion units in 2021, up from just 400 million in 2019. With smartphone sales on the decline, that could mean some trouble for Qualcomm sales going forward.
With that in mind, it's little surprise that Qualcomm would work to branch out. While the smartphone trade is unlikely to go away, potential weakness therein might prove a limiting factor. If Qualcomm can make good on self-driving cars, having a piece of that market would likely easily make up for smartphone losses.
While Qualcomm will likely have the same level of problem that Musk and Tesla had with self-driving vehicles, Qualcomm is advancing in this field. Qualcomm already had Snapdragon Ride, and Arriver was using Snapdragon Ride chips in its operations for the last several years.
By way of comparison, Nvidia (NVDA) has around $11 billion worth of sales pipeline operations for its DRIVE autonomous vehicle platform. Since Nvidia focuses mainly on premium cars, that leaves a whole range of budget models open for the Qualcomm platform.
Concluding ViewsQualcomm is branching out, and that's good news for investors. While the exact value of the self-driving car market may be limited until the potential sales pipelines become actual sales numbers, having a stake in a market that most will likely eagerly get in on is worth doing.
Better yet, the numbers look great for Qualcomm as well. With Qualcomm trading significantly under its lowest price targets, there's plenty of upside potential.
So Qualcomm has a solid position in a currently solid market -- smartphones -- but also a potentially sound position in a market that will be solid in the future in self-driving cars. That combination makes for a stock worth being bullish about.
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