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Monday, June 17, 2024

Why Tesla’s Not-So-Magnificent Start to 2024 May Be an Opportunity

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Do you have what it takes to be a successful Tesla (NASDAQ:TSLA) investor? You have to be able to handle share-price volatility and CEO Elon Musk’s unpredictable comments. As we get into our Tesla stock analysis today, we’ll have to address Tesla’s challenges. We’ll also identify a possible buying opportunity for some (but not all) investors.

Musk’s recent remarks about Tesla and the electric vehicle market were eyebrow-raising, to say the least. Still, TSLA stock earns a “B” grade as it can still appreciate in value over the long term, albeit with drawdowns along the way.

Musk’s Comments Shock and TSLA Stock Drops

In the wake of Tesla’s fourth-quarter 2023 financial report and Musk’s commentary, Tesla stock dropped 12.1% in a single day, falling to its lowest price in seven months. Naturally, the market was unpleasantly surprised as Tesla’s non-GAAP EPS only came in at 71 cents, down 40% year-over-year. Wall Street, meanwhile, had expected Tesla to earn 73 cents per share in Q4.

Musk’s remarks only added insult to injury for the company’s loyal shareholders. First of all, he Musk warned that Tesla’s vehicle-volume growth “may be notably lower” in 2024 compared to 2023. The Tesla CEO didn’t provide a specific number to accompany this warning, and Baird analyst Ben Kallo criticized Tesla’s outlook as “vague.”

Musk praised China-based automakers as being the “most competitive” and “extremely good.” These statements, by themselves, aren’t problematic. However, Musk also declared, “If there are no trade barriers established,” Chinese automakers “will pretty much demolish most other car companies in the world.” That’s certainly not a confidence-building statement for Tesla’s stockholders.

Not Everyone Is Panic-Selling Tesla Stock

Referring to TSLA stock, 50 Park Investments Adam Sarhan cautioned, “There’s no floor in this stock in the near term.” That might or might not be true, but not everyone is panic-selling and some Tesla bulls are optimistic about the automaker’s long-term prospects.

In particular, Baron Focused Growth Fund manager David Baron envisions Tesla stock reaching around $300 in approximately 12 months, and hitting $1,200 by 2030. Baron evidently acknowledges Tesla’s slowing sales growth, but nonetheless sees the company as a robust revenue generator.

“While he may not be growing 50% a year as the company thought… this year in a tough environment he’s still growing volume by 15% to 20% per year and making us $7,000 per car of gross profit,” Baron said.

Besides, there’s a catalyst coming that both Tesla’s customers and shareholders should appreciate. According to a Reuters report, Tesla “has told suppliers it wants to start production of a new mass market electric vehicle… in mid-2025.” This upcoming EV model is apparently code-named “Redwood.”

Supposedly, Tesla’s new EV offerings will even include an entry-level $25,000 vehicle model. This could be a game-changer in the global new-energy vehicle market, but it won’t happen tomorrow or next week. That’s why you’ll need to be patient if you really want to succeed as a Tesla investor.

Tesla Stock Analysis: Think About Your Timeline

Our Tesla stock analysis yielded mixed conclusions. Tesla’s Q4 2023 results and Musk’s commentary weren’t ideal. On the other hand, Tesla could generate substantial revenue from a mass-market EV model lineup.             

Ultimately, being a successful Tesla investor means being able to tolerate volatility and unpredictability. It certainly also helps if you’re willing and able to hold onto your Tesla shares for a few years or longer. So, TSLA stock gets a “B” grade and you’re encouraged to consider whether it’s an appropriate investment for you.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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