As Tesla (TSLA) prepares to release its first quarter earnings results, Wedbush Securities has lowered its price target on the stock, citing a demand slowdown and headwinds impacting the company's margins. Wedbush Securities Managing Director Dan Ives joins Yahoo Finance Live to explain why he believes the quarter will be "brutal."

Ives anticipates Tesla's first quarter performance to be "a nightmare on Elm Street," with demand slowing both domestically and internationally. Despite the disappointing expectations, "the growth story is still there," he says.

Ives highlights the ongoing price war in China's electric vehicle market and emphasizes that while Wall Street acknowledges this challenge, Tesla needs to "draw a line in the sand." He believes the company must reevaluate its China strategy to improve margins amid the rapidly evolving technology landscape in the country, stating, "It's a defining chapter in the Tesla story."

According to Ives, for Tesla to regain momentum, the company needs to implement a clear communication strategy regarding margins, outline "strategic targets" for its AI initiatives, and for Elon Musk must stop threatening to leave the company: "Tesla is Musk, and Musk is Tesla." He notes that although Tesla still holds growth potential, they must provide clarity to investors, asserting, "this is a quarter that's really gonna shake some confidence."

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

Editor's note: This article was written by Angel Smith

Video Transcript

[AUDIO LOGO]

JOSH LIPTON: Tesla taking a hit as Wall Street bulls turn cautious on the EV maker. Sluggish expectations for Tesla's first quarter deliveries and, of course, increasing pricing competition weighing on that stock. Dan Ives, Wedbush Securities managing director joining us now to discuss. Dan, great to see you my friend.

DAN IVES: Great to be here.

JOSH LIPTON: Great to have you on set. Let's just dig right into Tesla. Q1 deliveries on deck, what does Dan Ives expect?

DAN IVES: I mean "Nightmare on Elm Street," "Friday the 13th." It's going to be a bad one. And that's why--

JOSH LIPTON: That sounds terrible.

DAN IVES: Look, it was a brutal quarter. Because if you look, China demand softened significantly. We really had to cut numbers not just in China, but even in the US and Europe.

And our whole point is on the other side of this, the growth story is still there. But look, this is a fork in the road period for Musk to navigate. I mean, and this is going to be ripped a Band-Aid off when they report Tuesday morning.