TSLA Dives as Cathie Buys. Wall St vs Wood!
It has been a bloodshed week for Tesla.
Its stock price has lost -13.6%, ending Fri, 19 Apr 2024 at $147.05 per share. (see below)
Reasons for decline:
- Analysts’ disbelief in Tesla’s Robotaxis vision.
- Tesla’s EV price adjustments over and over again.
- Cybertruck’s disasters.
(1) Robotaxi.
On 05 Apr 2024, Mr Musk tweeted to:
- Refute Reuters news that Tesla will not produce the budget EV targeted for mid 2025 delivery.
- A few hours later, tweeted “agreeing” with Reuter’s report of robotaxi reveal on 8 Aug 2024.
In the ensuing week, Wall Street analysts weighed-in on Robotaxi.
Many have openly expressed their less than optimistic views about Mr musk’s decision, knowing that the man marches to his own tune. (see below)
More importantly, the veterans and experts in autonomous driving know full well that Tesla (Level 2) autonomous driving categorization is nowhere near ready.
This will just be another addition to his list of misses that has gathered over the course of time.
On Friday, market analysts started to revise Tesla price target southwards.
(2) Price Adjustments.
On 17 Apr 2024, it was reported that Tesla ended discounts on inventory across its EV lineup as part of a larger and vague plan by the CEO to “streamline the whole Tesla sales and delivery system.” (see above)
This came right after Tesla 10% staff retrenchment (14,000 employees) across his Gigafactory scattered worldwide.
On 20 Apr 2024 ( 3 days later), it was reported that Tesla has slashed its EV price by -$2000 for the US market. (see above)
As a rational consumer, will you dare buy a Tesla in the near term?
Knowing that its retail price may be reduced just like that?
It is not a joke to buy a big-ticket item only to “endure” an upfront “loss (discount).
(3) Cybertruck quality issue.
Tesla started delivery of its much delayed cybertruck from November 2023.
In less than 5 months , quality issues are surfacing with the most severe taking place less than 2 days ago.
3,878 Cybertrucks have been recalled, for Tesla to fix the pedal issue that could lead to severe accidents.
Look at the posted videos posted on the internet, to know its due to (a) poor design and (b) shoddy workmanship.; synonymous with the car maker.
As a result of the disaster, new deliveries to be delayed.
At press time, it’s still unclear how the car maker is going to resolve existing issue.
Whether it intends to do right and replace the design flaw (that would incur massive costs) or just use superglue to stick the detached pedal piece back to the lever.
Are you willing to purchase a design-flawed truck?
Tesla Fan Girl.
Despite Tesla last week’s headwinds, there is a fan girl happily buying Tesla stocks as its price continued to tumble.
Ms Wood has been progressively offloading Tesla shares through out 2023 as the stock price recovered. (see above)
This continued into end January 2024.
When prices started to dip from February 2024, Ms Wood began loading up on Tesla shares again.
Each time it fell, it is met with further purchase from ARK funds.
By 19 Apr 2024, it has been estimated that ARK Invest ETFs bought roughly $26 million of Tesla stock in the past 3 days, and more than $100 million in April 2024.
Supposedly, Ms Wood trusts that Tesla is too big to bankrupt overnight and banging current stock price is temporary.
What if her bets are wrong, going forward?
Price Target Downgrade.
Below is a list of downgrades by respective financial institutions’ analysts.
- $JPMorgan Chase(JPM)$ , Bank analyst, Ryan Brinkman : $115, down from 130. Underweight rating.
- $Deutsche Bank AG(DB)$ , Bank analyst, Emmanuel Rosner: $123, down from $189. Hold rating.
- Barclays Plc, Bank analyst, Dan Levy: $180, down -20% from $225. Hold rating.
- Citibank, Autos & Auto Parts Analyst Itay Michaeli: $180 per share. NA rating.
- Jefferies, Analyst Philippe Houchois: $165 per share. Hold rating. NA rating.
- Piper Sandler, Alexander Potter: $205, down from $225. Strong Buy rating.
My viewpoints: (mine & mine only)
Now is not the time to buy into Tesla; do not follow Ms Wood.
With a volatile market and impending Tesla’s Q1 2024 earnings announcement on Tue, 23 Oct 2024, it cannot be a worst combination.
Even if you want to add Tesla to your holdings, it should be after its stock price has stablized.
Tesla has the potential to fall further until $113.06 per share, achieved on 06 Jan 2023.
This comes about as Tesla looks to pivot from its core car making business to a broader self-driving and energy-storage future.
Will Tesla suffer the same fate as Twitter? The script is still being written !
- Do you think Tesla / Mr Musk is able to redeem himself for the hole he has dug and jump into it?
- Do you think it is prudent to refrain from buying Tesla shares at the moment?
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