Tesla Is Down 13% This Week. Is Tesla A Good Buy Or Good Bye?

🌟🌟🌟This has been a challenging week for EV stocks.  Almost all EV stocks are down including $Tesla Motors(TSLA)$  which closed 1.9% on Friday and has dropped 13% for the week.  This is due to slowing demand in major markets like US and China.  In fact some automakers like Ford are looking to expand production of hybrid vehicles.  This could have caused some investors to avoid pure EV stocks.

Tesla fell for a 6th consecutive day on Friday.  The decline could be attributed to news that it is recalling its Cybertrucks to fix a problem with the accelerator pedal.

Tesla has just cut prices for its Model Y, S and X vehicles.  This may cause more fears about demand, Tesla's product line up and its pricing strategy.

Deutsche Bank analyst Emmanuel Rosner has downgraded Tesla stock from Buy to Hold, slashing his price target from USD 189 to USD 123.  He believes that Tesla's lower priced vehicle, codenamed Model 2 will be pushed out beyond late 2025.

Rosner also mentioned even though CEO Elon Musk announced  an unveiling of Robotaxi for August 8, in no way does it mean the technology is ready.  He said that there is considerable execution risk for robotaxis and when it actually ready to hit the roads could be years away.

Tesla has just announced that it will slash its headcount of staff globally by more than 10% this week.   This represents about 14,000 staff. 

Tesla's share price is now down 40% year todate, underperforming S&P500 and Nasdaq by 6% and 7% gains respectively.

Tesla has suffered from declining car delivery growth and shrinking profit margins.    Since last year Tesla has cut prices as much as USD 20,000 on some models.  The price cuts has resulted in lower profit margins for Tesla. 

Tesla's deliveries declined by 8.5% in the first quarter to 386, 810 vehicles from a year ago.  It produced 433,371 vehicles during the period.  Wall Street Analysts had expected Tesla to deliver 454,200 vehicles.

The last time Tesla posted a sales fall was in Q2 2020 when the Covid 19 pandemic forced Tesla to shut down production.  Tesla attributed the drop in volumes partly to efforts to prepare its Fremont, California factory to handle increased production of the updated Model 3.  Tesla also mentioned the shut down s at its Berlin plant due to the impact of the Red Sea conflict and an arson attack.

A good strategy to hedge  Tesla's declining share price is to buy $Direxion Daily TSLA Bear 1X Shares(TSLS)$ .  This Inverse ETF provides 1x  negative exposure to the daily price movement of Tesla 's share price.  TSLS is up 1.9% on Friday and has risen 15% in the past 5 days.  TSLS has jumped 60% year todate.  However TSLS is not suitable for long term hold due to its compounding nature. 

The expense ratio is 1.07%.  Using TSLS is a lot easier than Options Strategy which are more complex and can incur more losses.  TSLS provide the advantage of capping the maximum loss to the original amount invested.    There is also no margin call on TSLS. 

However not analysts are Bearish on Tesla.  Cathie Wood, CEO of ARK Invest is Tesla 's most famous bull.  She recently bought shares after Tesla' s share fell 31% this year and still believes in Tesla's long term prospects due to its dominance in Autonomous  Driving and Robotics initiatives.

Cathie Wood that Autos in the future will be electric.  She believes that 75% to 85% of all auto vehicle  sales will be electric.  Tesla is not just an auto company.  It epitomises 3 Technologies - Robotics, Energy Storage and AI.

Cathie Hill said that now is not the time to run for the hills on Tesla's stock.  Despite Tesla 's recent troubles, she has set a price target of USD 2,000 a share for Tesla in 2027.

Another Tesla Bull is Dan Ives of Wedbush with a Buy rating, Target price of USD 300.  However Dan Ives said that Tesla has to focus on Model 2 rather than just Cybertaxi which may take years to develop.  

While I believe that Cathie Wood's Target price of USD 2,000 is rather lofty, I am certainly not running for the hills on Tesla' s shares.  Tesla is still the number 1 EV company in the world although its market cap has dropped to USD 460.78 billion recently. 

Tesla is due to report its Q1 24 earnings next Tuesday and I am keen to find out what CEO Elon Musk's plans are to boost Tesla 's flailing sales.

At the last closing price of USD 147.05, I believe that Tesla is a Good Buy, and not a Good Bye. 

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