On Monday afternoon, Elon Musk arrived in style at a groundbreaking ceremony for a Tesla (TSLA) lithium refinery in Corpus Christi, Texas. The billionaire CEO drove onto the scene in a Cybertruck with the U.S. and Texas flags waving out of the bed of the vehicle. There is never a dull moment for Tesla and Musk, with the two inextricably linked. But the top question for investors is always, when is it a good time to buy or sell Tesla stock?
Musk’s decision to tease the Cybertruck Monday comes as the new vehicle is slated to arrive in the third-quarter, which would be Tesla’s first new model since the Model Y launched in early 2020. Analysts are also projecting Tesla profits sliding 17% in 2023 with sales increasing 22%.
However, Morgan Stanley (MS) analyst Adam Jonas wrote on May 9 the Inflation Reduction Act (IRA) will boost Tesla, even as the EV giant has kept quiet on how the new policy will affect the company.
Jonas wrote that the IRA is so “advantageous to Tesla in terms of absolute dollars” that it “functions as an insurance policy that investors are currently overlooking.”
With Musk betting big on the Cybertruck and autonomous vehicle technology, along with a possible tailwind from the IRA, throngs of investors are looking to see if they can continue to make loads of money off Tesla stock.
With Tesla stock looking to rebound after a four-week slip, is TSLA revving up once more?
Tesla A Monster Stock Over Much Of Its History
Almost single-handedly, Musk has turned the auto industry on its head, essentially forcing it to get aboard the electric-vehicle train.
It’s a reason why Tesla has been a monster stock over much of its history, especially during its stratospheric run from mid-2019 to late 2021. The stock hit a bear market low of 101.84 on Jan. 6, but roared back until Q1 earnings.
On April 19, Tesla reported a big first-quarter earnings decline while revenue missed views. Profit margins for the global EV giant also fell below 20% as the company executed an aggressive price-slashing strategy in the first part of 2023.
Tesla reported revenue increasing 24% to $23.33 billion with EPS of 85 cents, a 20% decline compared to 2022.
The EV company’s total gross profit came in at $4.5 billion, with Tesla’s profit gross margin at 19.3%, down from 23.8% in Q4 and 29.1% a year earlier.
Auto gross margins excluding regulatory credits and leases skidded to 18.3% from 23.8% in Q4. That is below the 20% gross margin “floor” Tesla had previously targeted.
On the back of price cuts, the average Tesla vehicle selling price in Q1 was around $46,000, according to FactSet estimates. That’s down from $51,400 in the fourth quarter and $52,100 a year ago.
Musk told analysts Tesla is “comfortable” with its 2023 production target of 1.8 million. However, he downplayed the 2 million production number he used at the end of Q4.
“These are volatile times,” Musk said. “From a production standpoint, if things go well, we’ve got a shot at 2 million vehicles here. But that is the upside case.”
Is Tesla Changing Its Global Price Cut Strategy?
Tesla has slashed prices worldwide multiple times in 2023, starting in January and continuing into April. The only exception is China, where Tesla cut prices significantly in late October before the reductions in early January.
On April 14, Tesla reduced prices in several European markets. Tesla also dropped the price of its electric vehicles in Israel and Singapore in order to increase demand, expanding a worldwide discount push that began in China in January.
The global EV maker also significantly reduced prices in the U.S. and Europe on Jan. 13, then reduced European prices again in early March.
In Germany, Tesla lowered the price of its Model 3 and Model Y vehicles by between 4.5% and 9.8%, while it cut prices of the Model 3 and Model Y vehicles in Singapore between 4.3% and 5%.
However, Tesla recently raised Model S and Model X vehicle prices in China by around $2,750. That follows a $290 price hike in China on the Model 3 and Model Y. The global EV giant also increased prices on its two popular vehicles in other markets including the U.S.
Tesla Stock: Betting On Autonomous Vehicles And The Cybertruck
Musk has long touted Tesla’s Full Self-Driving (FSD) technology and the potential value it brings to the brand.
The Tesla CEO told investors during the Q1 earnings call the “value of a car that is autonomous is enormous.”
Musk also stressed that improvements in the FSD beta are “really quite dramatic.”
“The trend is very clearly toward full autonomy, and I hesitate to say this, but I think we’ll do it this year,” Musk said, referring to self-driving vehicles.
Musk tweeted on May 8 that Tesla will roll out a free month trial for all North America vehicles when FSD is “super smooth (not just safe).”
Meanwhile, the Cybertruck remains “on track to begin production later this year,” but it’s unclear if the initial output will still begin this summer. The Cybertruck status is officially considered “tooling,” according to Tesla.
Musk has said Tesla is anticipating a Cybertruck delivery event “probably” in Q3.
The Long-Awaited Semi Hauler Unveiled
In early December, Tesla unveiled its long-awaited Semi, an 18-wheel, long-haul electric freight truck, five years after it was first announced. However, in March, Tesla ordered a voluntary recall of 35 Semi trucks due to a parking brake issue.
Tesla began delivering its long-haul Semi trucks to PepsiCo (PEP) in December. Further, Musk has indicated there are plans to build out a charging network for long-haul trucks.
Musk did not specify how much the eighteen-wheeler costs. The Semi is capable of traveling an estimated 500 miles per charge. It can accelerate from zero to 60 in 20 seconds, Tesla says. The company expects to ramp production over the next year and aims to deliver 50,000 units in 2024.
Before the recall, PepsiCo confirmed it planned to deploy 36 Tesla Semi trucks, with 15 in Modesto and 21 in Sacramento.
Pepsi placed its order for 100 EVs when the Semi was first announced in 2017.
Tesla is currently under investigation by National Highway Traffic Safety Administration over possible seat belt failures. Regulators are also probing the EV giant over steering-wheel issues and driver-assistance concerns.
Is Tesla Stock A Buy?
TSLA surged 5.5% to 170.06 on May 5, snapping a four-week losing streak. Tesla stock had been on pace for a fifth straight weekly loss, which would have been the longest losing streak since March, 2021.
The EV giant is up 67% from a January low, but pulled back in its sixth week below its 50-day moving average.
Tesla stock ranks seventh in IBD’s Auto Manufacturers industry group, with Ferrari (RACE) and Stellantis (STLA) setting the pace. TSLA has a 60 Composite Rating out of 99. The stock also has a 20 Relative Strength Rating. The EPS Rating for Tesla stock is 93 out of 99.
With the market status showing “uptrend under pressure,” and Tesla stock not in any sort of valid base, TSLA is not a buy right now.
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