Tesla can turn around its 'trainwreck' quarter if Elon Musk stops his distractions and takes back control, Wedbush's Dan Ives says

• Elon Musk could turn around Tesla's 'trainwreck into a brick wall," Wedbush's Dan Ives said.
• The longtime Tesla bull still sees upside for the carmaker, despite a "massively soft" first-quarter.
• But better days ahead will hinge on Musk reining in his distractions and retaking control, Ives said.

Tesla may be able to turn things around after seeing a "nightmare" first quarter, according to Wedbush's Dan Ives.

The analyst and longtime Tesla bull pointed to the carmaker's dismal performance over the last three-month period, with its stock plunging 32% since the start of the year and deliveries falling way short of expectations. That's made the first quarter an "unmitigated disaster" for Tesla, Ives said in a recent note, also describing the last quarter as a "black eye" and a "trainwreck into a brick wall" for Tesla.

"We've been here before. We've been through other disasters. But you got to call it like you see it. In terms of 1Q, this was just a massively soft quarter," Ives said to BNN Bloomberg on Wednesday. 

But while demand in China has been weak, Tesla has plenty of positive catalysts over the long-term, Ives noted. The firm looks poised to take as much as 20% of China's EV market in the coming years. It's also working to develop its full self-driving technology, which could give Tesla's profits a major boost, some analysts say.

That suggests there's upside for Elon Musk's carmaker — assuming that Musk can take back control at the firm and rein in several of his "distractions," Ives said, referring to recent events like Musk floating that he would move AI projects away from Tesla if he didn't obtain at least 25% control of the company. The CEO also said he would work to move Tesla's incorporation to Texas from Delaware after his compensation package was struck down by a Delaware court.

"I think some of the distractions with Musk contributed to this," Ives said.

Musk will need to commit to being Tesla's CEO for at least three to five years, roll out a more concrete generative AI strategy, and deliver more guidance on Tesla's upcoming models, he added, if the company is to get through this rocky period. 

"Either navigate through the turbulence — and I believe he can — but if not, this is going to be the start of what could be a probably more darker chapter in the Tesla story," Ives said.

In a recent note, Wedbush maintained its "buy" rating on the stock and its $300 price target, implying a 78% upside from the stock's current levels. Other analysts on Wall Street though, have soured on their outlook for Tesla: Wells Fargo and JPMorgan recently downgraded their rating on the stock, warning of a 23% and 32% downside respectively.