Tesla’s Plateau: Stock Price Vulnerability Persists Tesla’s Plateau: Stock Price Vulnerability Persists

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By Ronald Tech

Tesla’s Financial Performance

The recent TSLA earnings report revealed sluggish revenues and margins, with the company projecting a continuation of this trend. The disparity between my EPS projections and the Street’s forecasts, which have historically influenced my stock evaluations, underscores my sentiment.

As long as bond yields remain unenticing, interest rates rise, and consumers defer car purchases, TSLA’s challenges persist.

Tesla’s Revenue and Margins

The absence of a high gross margin driver like FSD has transformed TSLA into a large, low-margin, cyclical auto company. Parallel slowdowns in revenues and margins suggest waning growth and a transition to a mature, cyclical establishment. The reduction in price reflects the demand’s reactionary response since TSLA is unwilling to curtail production, akin to a trader doubling down as a stock plunges, a precarious gambit indeed. Unlike most cyclical companies, TSLA has not adjusted its production-growth capacity in response to changing cyclical dynamics, heightening its risk exposure.

FSD’s tepid reception implies that this high-margin catalyst is likely to face further delays, further exacerbating TSLA’s vulnerability to auto cyclicality.

Without an FSD high-margin driver, TSLA is at the mercy of auto cyclicality.

Furthermore, conventional auto PE ratios typically fall below 10; based on my calculations, TSLA’s current PE ratio exceeds 100.

Tesla’s Energy Business

TSLA’s energy business is also exhibiting a deceleration in revenue growth.

Market Factors Impacting Tesla

Lower short-term Fed rates may not offer respite, as a robust economy can propel longer-term rates upward, deterring car buyers further.

From a technical standpoint, breaching TSLA’s 200-day moving average presents a risk, potentially driving the stock toward 130.

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A Shift in Investor Expectations

Many TSLA believers, having profited from substantial gains in the stock price, may be ill-prepared for the company’s new identity as a mature auto concern rather than a growth enterprise.

It is prudent to exercise caution in evaluating TSLA’s stock outlook.

All investments carry inherent risks and can lead to potential losses in both the immediate and protracted term. The information presented here is for informational purposes only and is subject to fallibility. By perusing this material, you acknowledge and assume full responsibility for your investment decisions and undertake to conduct your due diligence, indemnifying Elazar Advisors, LLC, and their affiliates from any liabilities. The opinions expressed reflect the current moment and are subject to swift alteration post-publication. The publication of our predictions outside the service may or may not prompt a public retraction of our views.