To The Moon

There is an English idiom that says… “When it rains, it pours”. I feel this describes what is transpiring at $Tesla Motors(TSLA)$ after it: Reported Q4 2023 profit & revenue miss. Provided a downbeat 2024 outlook on Wed, 24 Jan 2024 during earnings’ conference. Despite a +20% increase in vehicle volume, Q4 revenue grew by +1% only. This clearly indicates price cuts are not boosting revenue significantly. Tesla stock price is all over the place: On Thu, 25 Jan 2024 when trading resumed, it fell by -12.13%, marking the 4th straight quarter Tesla has suffered sharp one-day post-earnings-report selloffs. The chart illustrates: The performance of Tesla's stock (blue line) compared to the S&P 500 index (red line), over the past 7 days, following Tesla's Q4 2023 earnings release. While the S&P 500 has continued to rise, Tesla's stock price has shown a downward trend. Is the worst over for Tesla? I do not think so, given the news in the media. (see below) More bad news ! While above are analysts’ predictions about Tesla’s stock price being overpriced and no longer value for money, things at business front are not faring better. (see below) On 12 Jan 2024, Hertz Global- US 2nd largest car rentals declaring that they will not have Tesla’s EVs in its fleet anymore. (see above) To get rid of its fleet of Tesla’s, Hertz was willing to sell them for as low as $14,000 — thanks to Mr Musk price slashing, rendering Tesla’s 2nd hand EVs with little “value”. On 16 Jan 2024, another car rental company SIXT announced it would cut Tesla from its fleet because: (see above) Tesla’s deep price cuts undercut used car prices, an important revenue source for rental car companies. Tesla had higher repair costs compared to gas cars. Instead, it will purchase from veteran car maker $Stellantis NV(STLA)$, one of the Big 3 in US. On 06 Feb 2024, it is reported that German software company $SAP SE(SAP)$ will no longer source company cars from Tesla due to (a) delays in deliveries and (b) unpredictable price fluctuations. (see above) Mr Musk’s incessant price cuts is experiencing repercussions now, down the road. I cannot emphasize enough how important “fleet sales” is to auto-makers in terms of: Volume sales. Bulk purchases will have an immediate knock-on effect on revenue. Steady revenue. Predictable delivery schedule & budget makes forecasting and manufacturing manageable. Brand loyalty. Positive experiences foster long term working relationship & businesses. Testing ground. Demanding conditions for fleet-rented cars allow carmaker to quickly improve, fine tune and fix inherent “flaws” before it impacts individual consumers. New market. Fleet sales can open doors to new markets and customer segments that individual car buyers might not represent. More importantly, does this mean more “bad” news come April 2024 when Tesla reports its Q1 2024 earnings? Analysts’ predictions: Wall Street veteran analysts were quick to react to the news as they unfolded. Latest assessment: JPMorgan - analyst Ryan Brinkman: Trimmed price target by -3.7% to $130 from $135, implying -29% downside from Thursday’s $182.63 per share closing price. Piper Sandler - analyst Alexander Potter. Values Tesla's automotive division, excluding its Full-Self-Driving driver-assistance system, at around $135 a share. Daiwa - analyst Jairam Nathan. Cut rating to “Hold” from “Buy”. Trimmed target price to $195 from $245. Will there be more analysts providing their revised target prices of Tesla soon? Personally, I think so! Looking back. Back in October 2022, Wall Street analysts forecasted Tesla's profit would be $28.5 Billion by 2024. In contrast, now that we are in 2024, analysts expect Tesla operating profit to be $11.4 Billion, a lower target! Brinkman mentioned that: Tesla's current stock price is roughly the same as October 2022. Since October 2022, analysts' profit expectations for Tesla 2024 have dropped by -60% cumulatively. His biggest beef is that investors have not “criticized” Tesla or Mr musk, enough for its strategy to cut prices, and sacrifice profit for vehicle sales. Instead, they cheered. In the past, when traditional automakers did the same thing, he noted they were “criticized,” as discounting and “dumping” vehicles into rental car fleets to boost sales — in effect destroying used vehicles’ values, future vehicle margins and brand equity. My viewpoint : (mine & mine only) Every time when I post about Tesla, I get feedback that Tesla will not fall etc.. I get that too because it is too big to crash and belly up overnight. In addition, its production capacity is still humming along; unlike other EV makers who have issues ramping up capacity. Just that, I hold the viewpoint that it may not rise back to $300 per share, its last 3-for-1 stock-split on 25 Aug 2022. Taking a look at Tesla’s GAAP gross margins in FY2022 and FY2023, you will realize that it has been diminishing, since it peaked in Q1 2022. (see above) This is because other EV makers have started nibbling at the same EV pie that Tesla used to monopolize, giving Tesla a run for its money. $BYD Co., Ltd.(BYDDY)$ is a fine example. It has overtaken Tesla as the world's biggest EV company in January 2024. As competition further heats up, Tesla’s gross margin will fall further. When that happens, analysts will not fail to further downgrade the stock; plummeting it in the process. Must Read: Click on below titles to access. Give a like & help to repost ok. Thanks. PLTR rally rescue Market from Monday's chills ? Spot ETF sparks Bitcoin fall: Bull sign or fleeting light? Wall Street warrior - 7 Ackman Stocks rule the world. Do you think Tesla stock price will fall further in the intermediate to long term? Do you think there will be more bad press coming Tesla’s way ? If you find this post interesting, give it wings! ️ Repost and share the insights ? Do consider “Follow me” and get firsthand read of my daily new post. Thank you. @Daily_Discussion @TigerPM @TigerStars @Tiger_SG @TigerEvents @Stan66 @Hugoboss @KitKat @Racheal @Rashedul @doppio821 @olala666