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Want to know what's happening with Tesla? This video will give you the answers. I'll also share my honest thoughts on Tesla, whether I'm buying this stock, and what to expect next. We will also look at technical indicators. Negative headlines everywhere. Here's this one, for example: on the earnings report, Elon Musk said that Chinese electric car manufacturers would destroy most competitors if there were no trade barriers.
Before we continue, I want to hear from you. What do you think about the Tesla report? Are you buying these stocks? What do you think will happen next? So, we know that competition in the electric car market is increasing, and Elon Musk has said that Chinese manufacturers will achieve significant success outside of China.
Tesla shares are up about 25% over the past year, but are down 27% year-to-date, currently trading at $181 per share. So, again, negative headlines are everywhere. This is on Seeking Alpha. Electromobile shock . Tesla continues to lose ground after its 2024 forecast turned out to be vague. This is a good article because it summarizes the opinions of many analysts regarding Tesla after the report.
Here's the first: Tesla is factoring in 3.5% annual revenue growth, including a 15% negative impact from sales mix and price cuts. This morning, GDP data came out, and it was better than expected. You know, over 3% compared to the expected 2%; This will probably be revised downwards, but overall the result is solid.
There has been talk of a recession for as long as you can probably remember. And it seems that for pessimists, this is not leading to anything yet. We are at historic highs. Many of our favorite companies, like Nvidia, AMD , Microsoft, the " Magnificent Seven," are doing well. Tesla is an exception.
So why is that ? We'll talk about this in more detail later in the video. But again, I would love to hear your comments. What do you think? Dan Ives of Wedbush Securities, who is called the "eternal optimist," is not very impressed with the earnings conference call. This is the message you will see again and again if you do a little research .
And here is Dan's quote. We were wrong to expect Musk and the team to act like adults in this meeting and provide a strategic overview of price cuts, margin structure, and demand fluctuations. Instead, we got a general long-term view of Tesla and another failed conference call. These are strong words.
So, despite all this, IV still has a " outperform the market" rating for Tesla. He lowered his price target from $350 to $310. Well, the stock is currently trading around $180. So, this is significant growth potential. And you can see a few different quotes here. Here's one from Morgan Stanley. This is focused on lower volume growth and, essentially, a lack of understanding of what comes next.
In the short term, the indicators do not look very good. Of course, this is a push- pull dynamic with Tesla. Either you consider it a car company, or a technology company, an AI company, or a robotics company. So if you listened to the conference, there was a lot of talk about AI, FSD, and even Optimus, which could become the company's biggest business.
Of course, this is a very bold goal. And Wall Street cares about what happens now, not in 5 or 10 years. And the internet is full of articles and headlines that are quite pessimistic today. You can see " strong sales". Beth says "hold." This is a lesser-known author, but he says that stocks have fallen 23% and are now closer to 30% in 2024.
Nvidia rose 30%, Tesla fell 30%. This is a huge gap between these two companies. Nvidia has returned 30% of its profits in the first 15 trading days of the year, which is the average return for the S&P 500 over three full years. So you will see the same headlines over and over again. Competition from Chinese automakers, competition from other manufacturers, gross profit, valuation, etc.
This may surprise some of you . Even Beth in this article was generally quite pessimistic. She rates the stock as a " hold," but the article has a lot of negative information. This first chart shows the gross margin of the automotive business excluding regulatory credits. And you see that in the first quarter it reached 30%, and then it fell to 16.33%.
You see that it's a sharp drop down. Looking at Tesla's automotive gross margin, you can see that it has also shrunk significantly. Part of the reason Tesla used to have a premium valuation is that conventional automakers have margins of 5-10%. And at Tesla you saw 30%. And for comparison, here's a graph with Tesla, Honda, General Motors, Ford, and Volkswagen.
You see, Tesla is highlighted in purple at the top, it was significantly higher than the others for a long time, and now it is falling to the same ranges. In fact, according to this, Honda's margin is even higher than Tesla's. Honda has about 8.5%, and Tesla has about 7.5%, which is 1% less. But Ford is at the bottom — they have less than 3%, this is the green line.
Later, I will analyze the graph and express my opinion on what I see in it. Beth talks about the possibility of growth to $345–400, but for this the price must overcome the 264 and 280 levels. And this is still far away, $100 from the current level. And she says that if Tesla falls below 203, then the target price will be below $100.
That is less than $100 per share. If you remember, in January 2023, just a year ago, the stock was right around $100. But this is the most important point , because ultimately, if you are a growth investor, you are overpaying for stocks by waiting for development. Tesla is expected to report a slight drop in profits in the first quarter and almost zero growth in the second.
And this compares to previous forecasts of over 20% year-on- year growth. So, this is quite significant. And another main focus, of course, will be operating profits. So I'll talk more about that in a moment. I will also give you some candid comments . I'll just tell it like it is, about my feelings about Tesla stock and where it might be headed.
You see here the revenue growth forecast from Seeking Alpha—21%. But that's not the case anymore. The data has been reviewed. So in reality, these numbers wo n't be accurate either. And therefore the forecast P/E ratio is 62.04. This will no longer be true. In terms of profitability, it gets an A+ rating here at Seeking Alpha.
However, the gross margin is less than 20%. Remember this number, because we'll talk about it in a moment. So, I think what we discussed earlier is quite possible. This is not beyond the realm of possibility. I keep reminding the community that we do chart analysis every Wednesday on Discord for patrons.
I tell the community almost every week : be careful. Beware of relying solely on technical analysis, earnings reports and macroeconomics will be the most important. Of course, if Tesla beats earnings expectations and everything is positive, the stock will rise, and vice versa if the reports disappoint.
What's interesting about algorithmic trading is that it's not always accurate, but I like looking at these numbers. So, if you look at how algorithms work, they often use lows, recent highs, and calculate the average. And, in fact, they take the stock right to this level. That's exactly what happened this morning.
You can see that minimum here, around $102. That was only in January 2023, just a year ago. The stock bounced off this level, rolled back, soared to almost $300, and then fell again. So the stock price went from $100 to $300. She was constantly being thrown up and down. It was 212, jumped to 270, then recently fell to 193 dollars, soared again, and now, amid earnings reports, it has simply collapsed.
The shares started falling even before the report, and this morning at the market opening they simply bottomed out . This blue line, if you follow it, shows a downtrend. It would be logical to see the price touch the $175 level. If you take the low of $100 and the recent high of $265, divide it in half, and you get 182.50—which is where the price went almost immediately this morning.
Actually, I wrote on Discord that I was going to buy it around $184–185 because, looking at the chart, I thought the price could reach there, although it could well fall even lower. In fact, the lower limit of this correction is $150. I told the team this morning that I wouldn't be surprised if the price reached $150 or $160.
But, agreeing with Beth, I believe the price could fall below $100 per share. This is a very difficult question, because if you want to buy stocks, should you do it now ? Is it better to wait? You know, cost averaging really works. But let me be honest about what I really think. What do I think about Tesla?
Do I still buy stocks? Where will it go next? First, I own Tesla stock in my core and public portfolios, and I am optimistic about the long-term outlook. But what about the short and medium term? I will just say that I usually prefer investing in technology companies with higher margins. So a significant portion of my investments are cloud and semiconductor companies, cybersecurity firms, often with recurring revenue.
So I really like higher margin companies like software where it's 80%, sometimes 90%, and I also like stable income. Of course, Tesla has opportunities with FSD, as well as other options for implementing recurring revenue, but that's not the case at this point . And although Tesla is an artificial intelligence company at heart, the main focus of their business today is on electric vehicles.
I made this analogy in Discord this morning: It reminds me of SoFi. And not because of the margin profile, because in fact SoFi's margin profile is very good . It is about 81% versus less than 20% for Tesla, and this figure even continues to decline. So, you know, in general, I don't like to invest in companies that have 15-20% margins.
But it reminds me of SoFi in the sense that we like to invest in a company like SoFi, calling it a fintech company. This is a fintech stock. But Wall Street doesn't quite see it that way because SoFi owns a traditional bank. Many people, including many Wall Street analysts, want to classify it as a bank stock.
And what does that mean? Well, she won't have such a high premium. And this is also a problem for Tesla. Wall Street wants to classify Tesla as an automobile company. And if you classify it as an automobile company and look at the price- to-earnings ratio, which is actually going up and getting worse, then you can say that it's wildly overvalued, too expensive, and the company's history doesn't make sense to you.
Either you love Elon Musk or you don't. He is a very controversial personality. So you will have both mega- bulls and mega- bears. And this is truly what we call a cult action. So I'm investing in Tesla as a green energy and technology conglomerate, not just because of electric cars, but also because of energy storage , and because it's fundamentally an AI company that's doing a lot of exciting things that are visionary innovations for the future.
Therefore, in both portfolios, the cost of Tesla shares is lower than the current market price. So, this morning we bought some Tesla shares for the combined portfolio at about $185. And I believe there is a high probability that the price could fall even lower. What will happen? Analysts will start making forecasts and downgrading stocks.
This will create additional pressure. So , the stock is already under technical pressure according to the analysis. There is a lot of negative sentiment around. And here analysts are starting to lower the company's ratings. Remember, Wall Street focuses on 6-12 months, not 6-12 years. So personally, I consider this a balanced risk-reward ratio for long-term investments.
But in the short to medium term, I think you're going to face additional pressure. Write in the comments below what you think about Tesla. And are such videos useful to you? If you're new to the channel, that's what we're trying to convey. We are trying to help you become a better investor. We usually talk about exciting megatrends: rapid growth in semiconductors, artificial intelligence, cybersecurity, electric vehicles, and so on.
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