A tale of two Teslas from two analyst notes by guys named Dan

Ahead of Tesla’s third-quarter earnings this week, the company is at a critical and confusing time. Tesla just reported record vehicle deliveries after two quarters in a row of plummeting sales, making for its best quarter ever or its last good quarter for a while, depending on whom you ask and how important they think the end of the federal EV tax credit last month will be.

At the same time, much of Tesla’s value is pinned to products that don’t really exist yet — autonomous Optimus robots and autonomous taxis — but whose promise is so compelling that they’re lifting the stock near all-time highs.

As Barclays analyst Dan Levy wrote in a recent note, it’s a “tale of two stories.” Tesla is either a vehicle manufacturer in decline or an AI and autonomous company on the rise, depending on how you take your glass of water. And those two stories are perhaps best summed up by Levy and a note from another analyst of the same first name, Wedbush Securities’ Dan Ives.

For a more bearish take, here’s Levy from Barclays:

“The stock has rallied sharply since the beginning of September (+32% vs SPX +4%), driven by optimism on Elon’s re-engagement (’25 comp package, $1bn share purchase) and strong (albeit temporary) 3Q fundamentals. We believe fundamentals have been secondary to the broader theme of AV/AI narrative command for Tesla, with the AV/AI opportunity remaining front and center amid an attractive TAM [total addressable market] opportunity, regardless of how distant the opportunity/ monetization may be. While current data points on Robotaxi/Optimus have been limited, investors have been encouraged by the ‘Mars-shot milestones’ in Elon’s proposed ’25 comp package, most of which would require significant advancements in AV/AI and stock performance.

At the same time, we believe that fundamentals don’t matter...until they matter. We believe fundamentals will eventually return to being important to Tesla investors, especially as the core auto business is critical in funding future AV/AI growth efforts, including the very cash-intensive robotaxi scaling process.”

And for the bull side, here’s Wedbush’s Ives:

“After a brutal few quarters we are finally starting to see stable demand trends for Tesla. With some Model Y refreshes abound we expect generally positive commentary around more stable demand into year-end...although the EV tax credit ending in the US and sluggish Europe demand remains a headwind. That said, the Tesla story going forward is around the AI transformation being led by the autonomous and robotics initiatives...

The earnings/guidance on Wed are clearly important but take a backseat to the broader and important AI initiatives at Tesla. We continue to strongly believe the most important chapter in Tesla’s growth story is now beginning with the AI era now here. It starts with autonomous then robotics as we believe the autonomous valuation is worth $1 trillion alone to the Tesla story over the next few years that will start to get unlocked over the coming months.”

Both analysts maintained their existing ratings (“equal weight” for Barclays and “outperform” for Wedbush), though Barclays raised its price target to $350 from $275 while Wedbush maintained the Street high price target of $600.