To The Moon

I have often wonder if readers are aware that I try my best to present a “balanced” post, most of the time.

Prefer it to be “facts” based before wrapping it up with my view.

Like some, my “kryptonite” is $Tesla Motors(TSLA)$.

When it comes to the world’s first fully qualified EV, I tend to be overzealous.

Will today be the “exceptions”, let’s find out.

The above post explored and presented an “impartial” assessment of Tesla.

Tesla has been “downgraded” 4 times in quick succession over just one week.

Tesla - first downgrade

• Firing the first salvo was $Barclays PLC(BCS)$ analyst - Dan Levy.

• I covered it in detail in my 22 Jun post - US Interest To Rise In July & Tesla Gets Downgraded.

• Click “blue title” to read, show some love & give a “Like”, “Share” & “Re-post” after ok. Thanks.

Tesla - second downgrade

• One day after Barclay’s downgrade declaration, $Morgan Stanley(MS)$ fired the second shot.

• It did however raise its target price to $250 though.

Tesla - third downgrade

• Hot on the heels of Morgan Stanley was DZ Bank.

• On Fri, 23 Jun the bank deemed Tesla a “Sell”; most severe rating of the 3 institutions.

• Target price was at $210 per share.

Tesla - fourth downgrade

• Just when the coast is “clear”.

• Out of blue, the fourth downgrade from veteran banker $Goldman Sachs(GS)$ came - fast & furious.

• Similarly, it has upped Tesla’s target price to $248 per share.

Below are possible justifications:

• To move inventory, Tesla has gone back to discounts and “promo” deals until end June 2023.

• To further “coerce” sales thru, Tesla has given 3 months of “free & unlimited” charging for customers who purchase a Model-3 between June 14 - 30.

• In China, Tesla even “throw-in” free car insurance for Model-3 if purchase is completed before end June 2023.

• In the US, Tesla also got all Model-3 & Model-Y EVs trimmed so that it qualifies for the $7,500 tax credit under the Inflation Reduction Act (IRA) in early June.

All these actions will “eat into” Tesla’s margin; that Wall Street is dead focused on.

Although sales volume has increased QoQ, the same could not be said about each EV’s margin.

Looking back at Tesla’s Q1 2023 earnings’ data; that was exactly what has happened that led to Tesla’s further sell-off.

Is history about to repeat itself again?

Tesla Insider’s Activities

Tesla’s SVP Mr Andrew D. Baglino (alone) has sold 2 tranches:

• On 27 Mar 2023, he sold 10,500 Tesla shares - at an average price of $194.36, for a total value of $2,040,780.00.

• On 06 Jun 2023, he further sold 1,298 Tesla shares - at an average price of $215.51, for a total value of $279,731.98.

• In total (including SVP’s) - for past 90 days, insiders sold 161,730 shares of company stock worth $32,096,687.

• Corporate insiders own 20.90% of Tesla's stock.

“Insider” sale says a lot about staff’s confidence about Tesla, does it?

Do you recall similar events when mr Musk himself was:

• Offloading his shares over 6 tranches.

• Between December 2021 to December 2022.

• In a bid to build his cash coffer to (a) fund Twitter’s purchase & (b) fund its operations.

• Despite saying that (i) he would not sell-out and (ii) he has secured banks’ loans? What a load of baloney?

Extract from my 24 Dec 2022 post

Wall Street did not like his antics a bit.

And Tesla’s stock price “plunged” - recall?

Tesla's past 5 trading days stock price

• Based on most recent 5 trading days (20 Jun - 26 Jun), Tesla has lost -7.84% to its stock price.

• 26 Jun 2023 closing price of $241.05 has been its lowest so far.

• Its pre-market opening price as of 27 Jun, 5pm Singapore time is not looking better, slipping a further -0.10% to $240.82 (see below).

Tesla's 27 Jun pre-market opening price

What Do I Think?

• Much as I hate to say it, it looks as though Tesla has gained “meme” status, based on the downgrades, buy & sell movements recently.

• Amidst all the discounted selling, the brand equity has been damaged irreversibly.

• As a potential buyer, I think I will hold out to see if Tesla will be able to come up with an even “better” offer, considering that both US and Chinese economies are still way off recovery.

• Who knows there might be even “steeper” discounts and more enticing promos down the road?

• As an “investor”, perhaps it’s time to take profit (just like Ms Cathie Wood). She was still selling Tesla as of Fri, 23 Jun 2023 (see below).

• When Tesla has fallen “sufficiently”, then consider buying back the “sold” shares?

23 June 2023 reporting

• Do you think Telsa’s stock price will continue to consolidate this week?

• Do you think retail investors like us should take a leaf off these “veterans” and stay close to their action course?

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