Tesla fundamentals deteriorating at ‘alarming rate,’ says Guggenheim

Guggenheim says that while Tesla (TSLA) shares continue to be driven by robotaxi and political narratives in the near-term, the company’s fundamentals “continue to deteriorate at an alarming rate.” The “soft” Q2 delivery trends confirm demand for the refreshed Model Y has not helped Tesla’s sales momentum, says Guggenheim, which expects “sizable” negative revisions in the coming weeks to Q2 delivery estimates. The firm’s 360,000 estimate is well below the consensus of 415,000. Flowing through lower delivery forecasts for Q2 pushes the company’s auto gross margin forecast to 11.5%, below the 14.0% consensus, and free cash flow forecast into negative territory, the analyst tells investors in a research note. Guggenheim believes Tesla’s Q2 should have benefited from pent-up demand for the Model Y refresh, suggesting future delivery volumes and/or pricing could deteriorate further. It believes 2025 and 2026 expectations for Tesla “remain incredibly optimistic and bullish catalysts for the automotive business continue to be disproven.” The reiterates a Sell rating on the shares with a $175 price target The sock in premarket trading is down 2% to $313.