Is Tesla a Good Stock to Buy? Get All Information About It
Key Takeaways
- Tesla’s Performance: Despite setbacks, Tesla’s stock shows resilience and potential as a buying opportunity.
- Analyst Concerns: Analysts question Tesla’s ability to meet earnings expectations and its status as a growth stock.
- Delivery Goals: Tesla targets 1.8 million 2023 deliveries but faces challenges with lower estimates.
- Valuation and Growth: Earnings adjustments and growth rate changes highlight Tesla’s EV transition challenges.
Have you ever wondered if Tesla is a good stock a buy or not? What makes one stock to be worth investing in? And ultimately, why the whole world went wild for Elon Musk’s electric cars and cybertrucks?
Whether you’re an experienced stock investor or just starting your journey in the stock market, there’s a lot to learn about the famous Tesla model, interest rates, the essence of this electric vehicle (EV), and much more!
Especially in the era of rapid technological progress and the emergence of artificial intelligence (AI). So, what should you know about this stock before investing in it? Let’s get all the crucial and latest information!
Tesla (TSLA) on the rise again – get information
Tesla (TSLA) shares are on the rise again, rebounding from a decline after the release of third-quarter financial results, and this surge is happening just ahead of the Cybertruck delivery event scheduled for Thursday.
Nevertheless, it remains to be seen whether TSLA can achieve its target of delivering 1.8 million vehicles in 2023.
Tesla’s Q3 Results and Cybertruck Delivery Event Impact
Tesla faced disappointing Q3 financial results on October 18, causing a slump in its stock value.
Analysts are now questioning the company’s near-term strategy and whether it can maintain its status as a growth stock if its earnings per share (EPS) fails to show substantial growth in 2024.
However, TSLA has shown signs of recovery in November, just in time for the upcoming Tesla Cybertruck delivery event this Thursday.
Analyst Philippe Houchois’s View
Jefferies analyst Philippe Houchois recently lowered TSLA’s price target from 250 to 210 while keeping a hold rating. Houchois examined Tesla’s margins, competitive position, and economic moat in the face of growing competition.
He also delved into the Cybertruck, acknowledging the improbability of its cancellation just before deliveries. Surprisingly, he suggested that such a decision could have a positive impact on Tesla’s stock.
Considering the expected absence of growth in 2024, this strategic adjustment could enable Tesla to prioritize its core strengths, such as streamlining, expansion, and velocity, while navigating the increasingly competitive environment.
What are Tesla’s Challenges and Growth all about?
Is tesla a good stock to buy? Let’s discuss challenges. Morgan Stanley analyst Adam Jonas expressed worry about Tesla’s recurring failure to meet earnings expectations.
He particularly focused on Tesla’s ability to launch new vehicles, including the Cybertruck, which had its performance expectations lowered.
The Stock Surge and Investor Questions
Despite temporary growth issues, Tesla’s stock has been doing well in 2023, indicating investor faith in its future. However, investors are pondering when to buy or sell Tesla stock.
Meeting Delivery Goals
Regarding its products and services, the company has set an ambitious goal to deliver 1.8 million vehicles in 2023.
However, it’s worth noting that analyst estimates have fallen short of this target since October 18. They anticipate that Tesla will achieve 1.798 million deliveries for 2023, with projections indicating 473,000 deliveries in the fourth quarter.
These figures reflect the company’s performance in the United States and globally, showcasing the challenge of meeting its delivery targets.
Effect on Valuation, Earnings, and Growth Rates
Analysts have lowered their 2023 earnings estimates by 7%, and 2024 is expected to see lower earnings than 2022.
Growth rates have been impacted as analysts have lowered their 2023 earnings estimates by 7%, signalling a shift in Wall Street’s expectations. Furthermore, looking ahead to 2024, the trajectory suggests even lower earnings compared to the more prosperous year of 2022.
These adjustments underscore the short-term challenges Tesla faces as it navigates the evolving landscape of electric vehicles, gradually supplanting internal combustion engines as the dominant automotive technology.
Tesla’s Key Components – explanation
The significance of components such as battery packs and motors in Tesla’s electric vehicle strategy cannot be overstated.
Not only do these components play a pivotal role in achieving delivery targets, but they also directly influence Tesla’s valuation and the price-to-earnings (P/E) ratio, which is a key metric for assessing stock attractiveness.
By optimizing these crucial elements, Tesla can improve its profit margins and net income, a goal that CEO Elon Musk has consistently pursued in his company leadership.
Earnings Miss
Following Tesla’s Q3 earnings disclosure on October 18, the stock experienced a decline. CEO Elon Musk witnessed a two-year low in earnings, as Q3 earnings per share dropped by 37% to 66 cents.
Although quarterly revenue rose by 9% to $23.35 billion, Tesla’s automotive gross profit margins, excluding regulatory credits, decreased to 16.3%.
Profit Margins Under Pressure and Missed Target
Tesla’s Q2 auto gross margins, excluding credits and leases, were 18.1%, down from 19% in Q1 and below the targeted 20% floor.
Elon Musk’s Cautious Remarks Impact Stock
We are talking about Cybertruck and Economic Warnings here! Due to financial results discussion, Elon Musk’s cautious remarks about the Cybertruck and the overall economic landscape led to a 9.3% stock drop.
Elon Musk’s association with Twitter raised concerns about Tesla. While he acquired Twitter for $44 billion in October 2022, his appointment as CEO for X Corp., formerly Twitter, eased worries.
HSBC’s Rating and Tesla’s Strategy – Analyst’s View
On November 9, HSBC initiated Tesla coverage with a “reduce” rating and a $146 price target. Analyst Michael Tyndall highlighted Tesla’s reliance on vehicles for revenue and profits.
He emphasized the need for a shift towards robotics, autonomous vehicles, energy storage, and supercomputers. Tyndall also noted the risk associated with Elon Musk’s pivotal role.
Price Cuts Impact Profits
Tesla’s frequent global price reductions in 2023 affected auto gross profit margins, dropping below 20%, down from the peak of 30% in Q4 2021.
Upcoming Priorities – Company’s Future Focus
Elon Musk focuses on the Cybertruck and autonomous tech and the potential benefits of the Inflation Reduction Act (IRA). Tesla advances its Full Self-Driving (FSD) technology and prepares for Cybertruck deliveries.
Cybertruck Hype and Next-Gen Plans
The Cybertruck generates excitement as Tesla’s first new passenger vehicle since the Model Y in 2020. Tesla also progresses on its next-gen platform, with plans for a Mexican plant.
Tesla unveiled its long-awaited Semi in December 2022, delivering to PepsiCo. Plans for a long-haul truck charging network are in motion.
Should you invest in Tesla stock?
And now we return to that crucial question: “Is Telsa a good Stock to buy?” Should you consider it, with all the seriousness or not?
Tesla shares dipped after disappointing Q3 earnings and revenue on October 18. Still, there’s a potential buying opportunity in the form of a double-bottom base at a 278.98 buy point, per MarketSmith analysis.
In 2023, Tesla’s stock surged by approximately 100%, outperforming the S&P 500. Tesla ranks sixth in the IBD automaker industry group, with an 89 Composite Rating out of 99. It also holds an 85 Relative Strength Rating and an 88 EPS Rating.
The market shows a “confirmed uptrend,” while Tesla’s stock is around 15% below its official buy point, a trendline from July 19 offers an early entry option, potentially around Wednesday’s high of 252.75.
Bottom line
Tesla presents both opportunities and challenges for investors. Its recent performance, analyst concerns, delivery goals, and the impact on valuation and growth rates should be considered when deciding whether to invest in Tesla’s stock.
