"With $5+ of earnings power still hittable and the stock in free fall, we do not believe now is the time to bail on the stock," the Wedbush managing director stated in a new client note on Wednesday, adding that the stock is "way oversold on fears of the unknown are around the corner."
Ives has highly critical of Musk's chaotic leadership at Twitter and out in front of the fierce sell-off in Tesla that began in the latter months of 2022, removing the stock from his "best ideas" list in November. Since that call, Tesla's stock has crashed about 43%.
The weakness for Tesla continued into 2023. Tesla was the top-trending ticker on the Yahoo Finance platform as of Wednesday morning.
Shares of the EV maker fell more than 12% on Tuesday, the biggest one-day drop in more than two years. The stock at one point hit its lowest level since August 2020, with investors reacting to a lackluster fourth-quarter delivery figure released on New Year's Day.
Musk shed roughly $9.1 billion in net worth on the session, reflecting the loss in value of his Tesla shares.
The company saw fourth-quarter deliveries rise 18% sequentially to 405,000, missing consensus forecasts of 418,000. The figure brought Tesla's 2022 total deliveries to 1.3 million units, up 40% year-over-year but below the company's guidance for 50%.
The delivery miss further fueled concerns on the Street on the demand for Tesla's vehicles — a key factor in sending shares spiraling 65% lower in 2022. JPMorgan analyst Ryan Brinkman notably cut his profit estimates and price target on Tesla in the wake of the soft results.
And while Wedbush's Ives is sounding a little more upbeat on Tesla's stock amidst the rout, he echoes Brinkman's near-term fundamental concerns.
"The major worry now overhead for Tesla is that the demand story especially out of China is showing heavy cracks in the armor at a time that EV competition is steadily increasing domestically with NIO, BYD, Xpeng, and others fighting for a smaller pie with the Chinese consumer weakening," Ives wrote. "With China representing 40%+ of the global growth story for Tesla this is a heavy concern for the Street which will likely result in more significant price cuts over the coming months to spur demand as a potential pricing war takes place to gain market share in a darker macro backdrop."