To The Moon

Tesla has been dipping for days and closed at $219 on Tue. The company will release earnings on 24th Jan, and some investors say Tesla is entering the buying zone.

Is $Tesla Motors(TSLA)$ a buy at $220? What is your target price for Tesla?

Below are some insights from Tiger @Tiger_James Ooi, @koolgal and @Mrzorro. Which opinions do you agree with？

🎁Special Notes: Whoever showed up on the” What the Tigers Say” column will receive 100 Tiger Coins and an exclusive interview invitation to honor your contribution.

Click titles to read the full analysis:

1. @Tiger_James Ooi: Tesla Fell 3.7% on China Price Cuts News: Should Investors Be Concerned?

Key Points:

• This decrease also signifies a further slip in Tesla's profit margin, disappointing investors who believed the shrinking margin had come to an end.

• We see more price cut ahead and hence more hits to its already-shrinking profitability.

• Looking ahead, there are increased risks for Tesla in 2024 due to a lower profit margin outlook, potential decreases in deliveries, and the possibility of a higher tax rate.

• Despite these risks, we maintain a long-term bullish outlook on Tesla due to the anticipated Next Generation Platform (expected in 2025), a potential resurgence in gasoline prices driving EV adoption, better-than-expected execution on earnings targets, the potential rollout of a revamped Model Y, and multiples expansion (PE expansion) prospects given the rate cut outlook.

• The current share price of USD 218.89 is still 46% lower than its all-time high of USD 409.97 in 2021. The trailing twelve-month Operating Income stands at USD 10.7B, marking a 66% increase from the USD 6.4B recorded in 2021. Considering the PE ratio is now 70x compared to 399x in Nov 2021, we perceive the valuation for Tesla as currently undemanding.

Investment Strategies worth considering:

1. Buy deep in-the-money Tesla Leap calls. For example, buy Tesla Call option with a strike price of $130 with an expiration date of 25 Jan 2025. Delta is 0.906. (Pros: Delta is near 1, its profit and loss profile is similar to actual stock ownership, and the maximum loss is limited to the premium paid. Cons: LEAPS are typically more costly.)

2. Gradually invest in Tesla stock.

3. Dollar-cost averaging: Set up an auto-invest plan to invest a fixed smaller dollar amount in Tesla at regular intervals.

2. @koolgal: Is Tesla A Buy Now?

Key Points:

• Tesla said on Friday that it would stop nearly all production at its factory near Berlin from January 29 to February 11 because of a lack of components. Production is set to resume on February 12. Tesla builds its Model Y at its German Factory. The considerably longer transportation times are creating a gap in the supply chains.

• This is a clear sign that the attacks on shipping in the Red Sea by the Houthis in Yemen are hitting manufacturers in the region. This is the biggest supply chain upheaval since Covid 19 risks derailed the global economy recovery.

• Tesla has announced on January 12 2023 that it has lowered the prices of all two versions of Model 3 by nearly 6% and two of the three versions of Model Y by almost 3% in China. This sets the stage for increased competition that was already red hot.

• Lower selling prices for Tesla car would imply lower profit margin but possibly increased sales.

• However the good news is that Tesla announced that in the 4th quarter 2023, it has produced 495,000 vehicles and delivered over 484,000 vehicles. In 2023 vehicle deliveries grew 38% year on year to 1.81 million while production grew 35% year on year to 1.85 mill ion.

• So Tesla met its target of delivering at least 1.8 million vehicles for the full year in 2023.

3. @Mrzorro: Tesla Stock Is on a Bad Streak. It's Probably Taxes More Than Elon Musk

Key Points:

Tesla stock is weak despite delivering a record, and better-than-expected, 485,000 cars in the fourth quarter, up from about 405,000 in the fourth quarter of 2022.

"Tesla has seen an orderly pullback above its rising 200-day moving average, and it is now short-term oversold on neutral intermediate-term momentum," says Fairlead Strategies founder, and market technician Katie Stockton.

Market technicians look at stock charts to get a sense of how investors feel about any stock and to help predict where shares will go over the short- and medium-term. Oversold essentially refers to a stock dropping far more than expected, with the bad news causing excessive damage. Such stocks are typically due for rebound.

The early 2024 action appears to be more about profit-taking to start a new year. Tesla stock more than doubled in 2023. Selling stock early in any new year avoids paying capital-gains taxes until the next tax cycle. Selling at the end of 2023 would result in gains hitting an investor's current tax filing.

Questions for you:

Is $Tesla Motors(TSLA)$ a buy at $220? What is your target price for Tesla?

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⏰Duration

• 24 Jan (24pm EDT)