Tesla$Tesla Motors(TSLA)$ announced this week that it has shipped a record number of electric vehicles (EVs) in quarter one, despite supply chain issues and other macro pressures. But Tesla’s figures still fell short of analysts’ expectations and the stock is now facing competition from bigger automotive companies looking to steal some EV market share.TSLA delivered 310,048 EVs during the first quarter of 2022, most of which were the Tesla Model 3 and Tesla Y. Since the start of the year, Tesla’s stock price is up over 8% year-to-date: by comparison, the Nasdaq 100 (US100) dropped more than 8%. Unlike other technology stocks, Tesla has managed to hold its own.“Tesla is splitting stock which tends to push the price up. Investors should note that Tesla has a high price valuation, which may be off-putting to some. Likewise, the seasonal pattern is worth monitoring – Tesla shares have gained 9 times out of 11 years between April 1 and December 31, with the largest gain in 2020 with over 600% in profit. The average loss was only around -8%, while the average return was greater than 50%,” Giles Coghlan, chief analyst at HYCM said
But now it faces increasing pressure from other larger car groups looking for a piece of the EV market.“It’s an EV arms race. Tesla has “a bullseye on their back — the whole auto industry is gunning for them,” said Wedbush Securities analyst Dan Ives in a note.So how much pressure is now on Tesla to maintain its EV dominance and fight off its hungry competitors?
Pressure is on for Tesla
“The key question now is whether this pattern is sustainable as more and more electric vehicles are coming to market. Looking to the long-term, as Tesla’s peers overcome supply-chain concerns, investors will likely see competitors stepping into the ring, including already established automakers,” Coghlan said.“Likewise, if global stocks fall on stagflationary fears, this could weigh on new vehicle purchases as consumer spending power reduces. This is a major trade risk for Tesla – add into the mix a highly controversial CEO, and this is a potential recipe for volatility,” Coghlan said.So, the stakes are high for Tesla. Not only do they have some feisty competition waiting to steal its share, but it also has to continue to manoeuvre around supply-chain issues and ongoing macro pressures, which will no doubt impact its future performance.Future outlookBut analysts believe that as long as the energy crisis continues, companies like Tesla will continue to do well.“Tesla shares have exceeded earnings expectations for some time now, with the electric vehicle manufacturer managing a high pace of production despite the supply chain issues wreaking havoc on the markets. In short, this outperformance can be attributed to three factors – the first being the fact that oil prices are surging right now,” Coghlan said..
Tesla (TSLA) five year stock performance chart
“For as long as the energy crisis continues to unfurl, investors will be eyeing alternatives to keep consumers on the roads in a more sustainable way, with a view to lowering costs at the pump and to the environment. The second reason follows this logic – calls from policymakers to reduce carbon emissions are having an undeniable impact. Even President Biden has weighed in on the debate in recent weeks, calling for a greater adoption of electric vehicles (EVs) at a State of the Union Address,” Coghlan added.
But will Tesla be able to swerve future supply chain issues?
“The likes of Rivian, which has a higher market value than Ford Motor Co., have struggled under component shortages. Tesla, on the other hand, has responded with ingenuity, with a factory in Germany recently approved, as well as plans for Panasonic to build a factory in the US to make lithium-ion batteries,” Coghlan saidTesla has grown as a company over the years and has certainly made an impression on investors. However, with many challenges on the horizon, it’s difficult to know how long this current winning streak will continue.
Comments