TSLA
📉 Tesla’s stock has plummeted over 40% this year, diverging significantly from the S&P 500 and Nasdaq, due to concerns like Chinese competition and slowing sales.
🇨🇳 Increased competition, particularly from BYD in China, is challenging Tesla’s market share, especially in the mid and low-range vehicle segments.
🔮 Despite short-term bearish factors, long-term prospects like AI, robotaxis, and more affordable models could redeem the stock if Tesla meets its execution goals.
@bernardodegarcia:
“The markets may be overlooking and discounting too much pain for something that really won’t arrive. What do we expect from Tesla’s deliveries? What do we expect from its big events? And above all, what do we expect from its shares? Should we buy them now or wait a little longer? I’ll give you my opinion in advance, although this should be left until the end. I would be buying now. But as always, you know that this is not a video to recommend or not recommend. We are simply here, four or five, or however many of us there are, friends talking about stocks. Tesla’s shares have suffered a hard blow, falling more than 44% so far this year. Some analysts think that the lowest point is already behind us. Even so, there are factors such as growing Chinese competition, forecast cuts by banks, sales deceleration, and the image of a supposedly distracted CEO that continue to weigh on the shares. Tesla was down 44% this year. Currently down 42%, a very different performance from the S&P 500, which is up approximately 4%, and the Nasdaq, which is down a little less than 9%. It’s surprising because if you zoom out a bit, the last 12 months still show Tesla with a 37% return, beating the main indices. That really means that between January and February, there was a very high peak in the price, especially after the November presidential elections and Trump’s victory. Since then, the shares have plummeted 50% from their highs. Several voices in the market have spoken out, so let’s recap four major forces driving the massive sale of Tesla shares. The first is Chinese competition, and when we talk about Chinese competition, I think one name comes to mind: Build Your Dreams (BYD). BYD has just announced a very interesting ultra-fast charging technology, capable of offering up to 400 km of autonomy with 5 minutes of charge. If BYD does it, soon other companies will come, including Tesla, and being able to charge your electric vehicle 400 km in 5 minutes is great because it leaves any internal combustion vehicle far behind. Comparing this with Tesla’s Supercharger, we are around 270 km in 15 minutes. It’s a huge jump. BYD plans to install 4,000 of these chargers throughout China. Several banks and institutions have reduced their projections for the stock. RBC, for example, maintains a superior performance rating but lowered its price target from 440 to 320 per share, justifying it by lower revenue forecasts in full-self driving, greater competition in Europe and China, and lower Tesla participation in both markets. JP Morgan adjusted its price target to $135, a 41% decrease due to the drop in vehicle deliveries it sees for this year. The third factor is the slowdown in sales. Tesla saw its sales almost 50% year-on-year in February, which is the lowest level of exports and deliveries since August 2022. Similar situations also occurred in Europe. In January, Tesla registrations in Europe fell by 45% compared to the same month in 2024, while the sale of electric vehicles in the region rose by 37%. In February, data from Germany point to a 76% drop in Tesla registrations. The fourth force lies in the figure of its CEO, Elon Musk, and the criticism that he is not 100% with Tesla, but rather engaged in the political sphere. For many investors who revered Musk as a technological innovator, seeing him involved in policies of massive spending cuts and tense international discussions with China and Europe is a bit suboptimal. In addition, there have been protests against Tesla and acts of vandalism at dealerships and charging stations, which obviously damages the brand’s perception. RBC or JP Morgan do not consider an imminent resurrection of Tesla likely until it clarifies its demand problems and launches a truly economical new model. There is doubt whether that hypothetical vehicle will arrive in the middle of this year. It is worth noting that not everyone is bearish. There are those who think that Tesla already hit the floor last week around $220, and the recent drop in reputation will not have such a lasting effect. Credit card data shows that there has not been a significant decrease in Tesla orders in the last 6 months. At the same time, there are obviously concerns beyond China and Europe. The Trump White House has not been willing to launch any stimulus to help Tesla. Aswath Damodaran, known as the dean of valuation, suggests that Tesla may be worth $148 per share if the current trend of competitive pressure and weakness continues. However, Damodaran maintains a long-term tone, saying that if Tesla achieves robotaxis or a larger portfolio of affordable vehicles, the figures could be much higher. Ron Baron has very bullish estimates. Some visions speak of more than 120 to 300,000 million dollars in annual profit by 2040 if the self-driving technology takes off. In the short term, Tesla is dealing with a combination of bearish factors: sales decline, criticism of the CEO, growing competition, and analysts cutting estimates. The problem of the trade war with China and political tension are not helping either. But in the long term, the promises of AI, robotaxis, cheaper models, and others could redeem the stock, obviously, as long as Tesla fulfills its execution. From a valuation perspective, many see room for additional decline if the economy slows down or if Tesla does not revive demand. However, investors willing to endure volatility, and almost more importantly, believe in Musk’s vision, may consider this price interesting to average down, doing a Dollar Cost Averaging, expecting that in 5 or 10 years, Tesla will exhibit a much more than notable profitability.”
@bernardodegarcia shows viewers the exact part of the YouTube video where the stock is discussed:
View the video on YouTube.
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