As the owner of a financial platform focusing on stocks, it is not uncommon for me to receive questions about my thoughts on various stocks. I am hesitant to give financial advice or suggest stocks, primarily because I am not a financial advisor but also because I know from experience that people are quick to blame you when they incur losses. Still, they are not equally generous in expressing gratitude for gains. In the past year, the main focus of these questions has been Nvidia, and each time, I do point out that it is difficult to determine—at least for me—how much of it is real gains and how much is speculation. I then quickly close the matter by suggesting waiting until the earnings in May to find this out. Then – in the last two weeks – I added this question: What about Tesla and Apple? Did you buy them?
At this point, people are a bit puzzled, and that’s because Tesla and Apple have been isolated from media coverage in the last few weeks. This is mainly because they wouldn’t be as exciting news compared to Nvidia, Micron, and all the other AI-related stocks.
In my opinion, however, these two stocks are great choices not only because they are strong companies with world-class leaders who I’m sure will perform well in 2024 and 2025 but also because they are currently trading at very low prices.
Tesla’s financial Performance YTD
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At press time, Tesla is trading at -31.04% YTD and approximately 57.94% from its peak price of $407.36 on November 5, 2021.
2023 has been a great year for Tesla. The company boosted its production, leading to a notable increase in stock value. Tesla delivered vehicles with a 38% increase, totaling 1.81 million units, and saw a 35% increase in production. The Model 3 and Model Y played a significant role in driving the company’s success. As a result, Tesla’s revenue growth increased by 3% in the last quarter compared to the previous quarter, with the stock reaching a price of $252.54 on December 22.
The company’s success in 2023 can also be attributed to new models like the Model Y, Model 3, Model S, Model X, and the highly anticipated Cybertruck, showcasing Tesla’s commitment to innovation and performance in the electric vehicle industry.
So….what did go wrong in 2024?
What went wrong in 2024 can be summarized in one word: prices.
A big priority for Tesla in 2024 is to achieve unit growth, and in order to do that, Tesla had to reduce its prices to broaden its customer base. Investors have been very skeptical about the possibility of price reductions that would still allow the company to maintain its profit margins.
Tesla’s stock price surge by 7% following the announcement of price hikes for Model Y vehicles in the U.S. and Europe suggests a correlation between stock performance and product pricing. As of March 22, customers in some European countries can expect an increase of approximately 2,000 euros for Model Y vehicles, while all Model Y variants in the U.S. will see a $1,000 price hike starting April 1. This strategy seems to be aimed at helping the stock to experience another deep. Tesla’s stock price rose to $174.72 at the announcement, marking its biggest one-day increase after a previous decline.
According to the screenshot provided below, analysts have revised the target price, for Tesla (TSLA) stock with a consensus of $273.52. Analysts agree on a “BUY” rating, with projections ranging from a low of $85.00 to a high of $526.67.
The latest recommendation was given on March 16th 2024, with analyst Garrett Nelson giving a price target of $275 versus the current price of $171.32.
What’s next for Tesla stock?
Tesla is now struggling to find solutions for several problems that arose in 2024. Among these, Tesla is trying to set prices that are low enough to expand their customer base but at the same time, high enough to maintain profit margins and keep investors satisfied. From another perspective, competition has become a significant issue, with Chinese automakers and established brands such as Volkswagen and Ford investing heavily in the electric car market.
Lastly, Elon Musk’s many ventures come with the constant worry that he might lose focus on Tesla’s main issues. We saw this when Elon Musk took over Twitter, now renamed X, and Tesla’s stock lost significant value due to these concerns.
However, according to many, Tesla is synonymous with Elon Musk. The company’s chief executive, speaking at a Tesla factory near Berlin yesterday, stated, “They can’t stop us.” This is not just an inspiring quote; it’s a foundational belief for anyone who sees Elon Musk as pivotal to Tesla’s recovery.
Despite all challenges, Tesla remains the leading company in the electric vehicle industry, thanks to its efforts in areas like self-driving technology and the introduction of new models such as the Cybertruck. As always, when it comes to Tesla, analysts are split almost equally into two factions: bears and bulls. Bulls highlight Tesla’s strong history of recovering from losses. In 2022, the company’s stock lost almost two-thirds of its value, yet it managed to recover fully and even further increased its value by doubling in 2023.
Because of Tesla’s quick ability to recover and the trust in Elon Musk, supporters are confident in a forthcoming recovery, suggesting that Tesla’s stock is a highly discounted opportunity to buy right now.
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