Will TSLA Tumble on 23 July? Are There Signals?
Stock Take.
Shares in $Tesla Motors(TSLA)$ have gone into overdrive in July 2024.
Its +33% share price increase saw the company’s valuation grow by $209 billion in the first 8 trading days.
According to AJ Bell AJ Bell, Investment analyst, Dan Coatsworth, it’s a sum that exceeds the aggregate stock market value of Europe’s Mercedes Benz Group, $Volkswagen AG(VLKAF)$ and $Stellantis NV(STLA)$ ($198 billion).
What Inspired The Romp ?
It is hard to exactly pinpoint a reason.
Possibilities may include:
Ongoing investor enthusiasm for companies that are perceived as AI (& autonomous driving) plays.
Mr CEO’s courtroom victories at Tesla and X.
Ongoing hopes surrounding the Cybertruck, the supercharger network and the ride-hailing app (LOL!).
Mr CEO’s deftness - marketing himself & Tesla via his propaganda platform “X” (formerly Twitter), that helps him stay in the limelight.
Delivery & Earnings Recaps.
Recent spike definitely cannot be due to Q1 2024 earnings, because:
It was Tesla’s lowest profits since Q2 2021.
Cash flow was shrivelling.
Excess inventory was surging.
Digging a little deeper, hopefully will reveal readers make up their minds or maybe not if, reader is a forever-fan regardless.
Production vs Sales.
On 02 Jul 2024, Tesla released its second-quarter production and delivery numbers. (see above)
Tesla produced 410,831 EVs and delivered 443,956 EVs.
This was a -14% YoY drop in production and a -5% YoY drop in unit sales / delivery.
The “brighter” note:
It helped to reduce (partially) excess inventory (33,125 EVs) reported in Q1 2024.
QoQ unit sales was higher compared to Q1 2024’s data.
Revenue vs Growth.
Based on straightforward proportional estimates, analysts estimated second-quarter revenue to be around $25.1 billion.
That will be +18% higher than Q1 2024. Realistically, it should be broadly flat YoY. (see above)
For the third quarter, the current consensus is sales of $25.7 billion.
And just like that, it would signify a return to growth in the top line of some +10% YoY. (see above)
Other Revenue Sources.
Tesla has other revenue streams as well.
So, analysts & shareholders would need to consider that:
Where (a) energy storage, (b) energy generation and (c) other business lines accounted for 19% of total revenue in Q1 2024. (see above)
Comparatively “better” than the 10% in Q1 2022 (2 years ago).
It is “safe” to assume that there is growth, albeit a gradual one.
Earnings Per Share.
For Q1 2024, headline earnings per share (EPS) has slumped to $0.37.
For Q2 2024, based off proportional estimates — analysts’ consensus is a rebound to $0.62. (see above)
Note: Forecast EPS is still -33% YoY lower than Q2 2023’s EPS ($0.91).
For Q3 2024, the consensus EPS forecast is $0.63.
Inventory.
In Q1 2024, Tesla has +12% more unsold EVs inventory compared to Q1 2023 (YoY).
This despite selling less overall.
Inventory pile-up is a record high of $16 billion and takes a whopping 83 days to sell.
This is the slowest since the pandemic's peak in 2020.
Separately, customer debts (receivables) also rose by +30%, but that's a separate issue, impacting free cash flow (FCF).
My viewpoints: (mine only)
(1) Meme Status Stock.
Tesla’s stock price spiked after its Q2 2024 production & delivery numbers release, make this EV pioneer feels like it has morphed into an meme stock, albeit an “expensive” one at $200+ a pop.
If similar Q2 delivery were to be reported by company, quite certain the stock would have sunk into the abyss.
It’s as if fans and punters are trying hard to prop the stock price back to it 25 Aug 2022, post-split price of $302 per share.
(2) Leadership Challenged.
Since 2022, the EV and autonomous driving landscape have undergone drastic evolution.
It might be a bitter pill to swallow for Tesla fans.
Truth is, Tesla is no longer the EV leader:
Not by volume.
Not by technical advancement in the EV.
Not by quality.
Not by car design & model.
Not by anything (period),
This is because its visionary CEO has been significantly distracted by his other projects - SpaceX, Twitter, Neuralink and xAI (latest).
Chinese EV makers (eg. $BYD Co., Ltd.(BYDDY)$ and $Li Auto(LI)$ have cracked the DNA on how to scale up EV production, a technical know-how that still has eluded most Western car makers.
It is also the reason why both US and EU are raising trader barriers in an attempt to protect its domestic auto industry.
(3) Robotaxis.
Google’s Waymo and General Motor’s Cruise started operating commercial fleet of robotaxis in October 2020 and early 2022 respectively.
Waymo:
Arizona: Phoenix
California: San Francisco and Los Angeles
Texas: Austin (planned expansion)
Cruise:
California: San Francisco*
Texas: Austin*, Houston*, Dallas (planned launch)
Note (*) - Robotaxis paused in October 2023 with services resuming gradually since June 2024.
Tesla:
On 05 Apr 2024, Mr CEO tweeted on “X” about Tesla robotaxi unveiling on 8 Aug 2024.
On 23 Apr 2024: Mr CEO even included mock-up drawings of its ride hailing mobile app in the Tesla's Q1 2024 earnings report. Great marketing ploy I might add.
On 11 Jul 2024: Rumours surfaced that Tesla’s robotaxis will be delayed till October 2024.
On 16 Jul 2024: Mr CEO decided to come clean and officially confirmed the delay, offering a feeble argument.
Let’s just say I am not in the least bit surprise to learn about the delay.
Tesla has always missed deadlines and delivered shoddy products - historical facts that cannot be refuted.
Perhaps, for a startup company, the delay might be “forgivable”.
For a listed company and its dismal track records - unforgivable !
(4) Dwindling EV Sales & Price.
According to Cox Automotive:
In first half of 2024, EVs’ share of new-car sales in US grew to 8% vs 7.2% a year ago.
Tesla’s market share has fallen to less than 50%, however.
According to CoPilot data, Tesla’s US best seller - Model “Y” prices have declined by a significant -20% in the last 2 years due to a supply glut and slowing demand.
Even Tesla’s #1 fan cum speculator, Cathie Wood of ARK Funds have once again sold Tesla as reported on 19 Jul 2024. LOL 1
What does that mean for individual investors, investing our own hard-earned monies?
With facts under one roof, is it clear that Tesla is no longer leading the EV race? It is playing catch up. I wonder what rabbit will Mr CEO pull out of a hat come October? Another delay - perhaps!
Must Read: Click on below titles to access. Give a like & help to repost ok. Thanks.
Do you think Tesla is still leading in the EV landscape ?
Do you think Mr Trump interferences in US auto industry will send US car makers back to the Dark Ages?
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.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Looks good today, looking forward tto the earnings soon!
Excited for earnings, may the best gambler win
Pls help to "Re-post". Tks! Rating is important (to me).
Would you consider "Follow me" and get first hand read of my Daily new posts? Thanks!). Tks!