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2022-10-24

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Tesla Stock Could Rebound in 3 Months. Here’s What it Would Take

Elon Musk says that Tesla could someday be worth more than Apple and Saudi Aramco, combined. First,

Tesla Stock Could Rebound in 3 Months. Here’s What it Would Take

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Here’s What it Would Take","url":"https://stock-news.laohu8.com/highlight/detail?id=2277265831","media":"Barron's","summary":"Elon Musk says that Tesla could someday be worth more than Apple and Saudi Aramco, combined. First, ","content":"<html><head></head><body><p>Elon Musk says that Tesla could someday be worth more than Apple and Saudi Aramco, combined. First, it needs to get through the next few months.</p><p>Before Tesla (ticker: TSLA) reported third-quarter earnings this past week, investors had been hoping they would allay concerns that had been growing since the company released second-quarter numbers three months earlier. They did no such thing. While earnings topped expectations, third-quarter deliveries, sales, and profit margins all fell short of Street projections. Tesla shares slumped 6.7% following the release, putting them down 22% since the end of September, their second-worst start to a quarter since the first few weeks of 2016.</p><p>But for all the bad news, Tesla sees massive growth in 2023, as new plants in Germany and Texas continue ramping up. Tesla’s long-term bets on batteries and new vehicles should also help it lower costs and boost sales, though it remains to be seen whether growth comes at the expense of profits.</p><p>What’s more, Tesla still plans to deliver at least 450,000 vehicles during the fourth quarter, a massive number that, if achieved, would likely make the concerns disappear. While giving up on Tesla, or at least its stock, might strike some investors as the path of least resistance, giving the shares another three months seems to be the smart thing to do.</p><p>The nervousness pervading Wall Street about Tesla is palpable. Since the electric-vehicle maker reported, the average analyst’s price target on its stock has slid more than 4%, to $287. Among the most pressing concerns: Gross automotive profits per car, excluding regulatory credits, have fallen from a record $15,700 in the first quarter to $14,700 in the second and $14,300 in the third from an average car price of $54,000.</p><p>Arresting that profit decline is important, but Tesla also wants to hit its goal of 50% average volume growth in 2024, and that likely means a new manufacturing plant and introducing a lower-priced model to expand its market and fend off growing EV competition. The worry is that Tesla might end up looking more like Toyota (TM), which earns about $4,400 selling cars that average about $30,000 each, than the highly profitable company it is now. “The margin compression story is a worry and feeds into the bear thesis on Tesla,” says Wedbush analyst Dan Ives, who has an Outperform rating on the stock.</p><p><img src=\"https://static.tigerbbs.com/7a934f344b6806a2e133fa93043ae69d\" tg-width=\"944\" tg-height=\"642\" referrerpolicy=\"no-referrer\"/></p><p>New vehicles, however, are the future of Tesla. On the company’s conference call, CEO Elon Musk said that a vehicle platform supporting a $30,000 compact EV is now the primary focus of his development team. That’s for good reason—more than half of the cars sold in the U.S., excluding trucks, sell for under $36,000. “The new Tesla $30,000 compact is a big deal that investors may be missing,” says Future Fund Active ETF co-founder Gary Black. “It dramatically expands Tesla’s addressable market.”</p><p>Also broadening that market, to a much lesser extent, is the much-delayed Cybertruck, set to hit roads in 2023—some 3.5 years after it was launched. It will have an estimated base price of $40,000 to $70,000, depending on configuration.</p><p>Other Tesla businesses are expanding, as well. Tesla’s energy-storage deployments hit 2,100 megawatt hours in the third quarter, up from 1,295 in the third quarter of 2021. And Tesla said it has tripled production of its larger-size battery cells, dubbed 4680s, though the introduction of those is still behind schedule. Significant 4680 output “was not as far off as I feared,” says Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, who notes that these batteries will help drive down product costs and improve vehicle performance.</p><p>Most important, while Tesla acknowledged that it won’t be able to deliver the 500,000 vehicles during the fourth quarter needed to hit 50% growth in 2022, guidance from CFO Zachary Kirkhorn implies that its fourth-quarter deliveries should top at least 450,000. That exceeds Wall Street projections and would be a quarterly record by some 100,000 units.</p><p>A number in that range would make 50% volume growth in 2023 look feasible. It would also signal that margins are set to improve because efficiency and production speeds in Texas and Germany are rising, boosting the potential profit on each vehicle produced. “Short term, investors may focus on [margins] and demand being a little harder,” wrote RBC analyst Joseph Spak in a report following earnings. “However, midterm, we aren’t too worried about demand [and] see [a] path back to 30% [gross margin].”</p><p>But first, Tesla has to get through the next week. Musk is likely to complete his purchase of Twitter (TWTR) before Oct. 28—if the U.S. government doesn’t block the deal—for $54.20 a share, something that would necessitate his selling $5 billion to $10 billion in Tesla stock to help fund the purchase.</p><p>Investors don’t want to buy Tesla shares ahead of the large sale, which perhaps explains some of the stock’s recent weakness. With the deal set to close, Musk’s sales should be done soon. If the stock fails to hold around $200 through that sale, the downside risk is immense, says 22V managing director John Roque. “A break of $200 will suggest risk to $100,” he says.</p><p>In all, a lot will be clearer in three months. If Tesla pulls through, that could be a good time for investors to pounce.</p></body></html>","source":"lsy1610680873436","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Tesla Stock Could Rebound in 3 Months. 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Here’s What it Would Take\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-10-24 16:05 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.barrons.com/articles/tesla-stock-elon-musk-twitter-51666389541?mod=hp_LATEST><strong>Barron's</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Elon Musk says that Tesla could someday be worth more than Apple and Saudi Aramco, combined. First, it needs to get through the next few months.Before Tesla (ticker: TSLA) reported third-quarter ...</p>\n\n<a href=\"https://www.barrons.com/articles/tesla-stock-elon-musk-twitter-51666389541?mod=hp_LATEST\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://www.barrons.com/articles/tesla-stock-elon-musk-twitter-51666389541?mod=hp_LATEST","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2277265831","content_text":"Elon Musk says that Tesla could someday be worth more than Apple and Saudi Aramco, combined. First, it needs to get through the next few months.Before Tesla (ticker: TSLA) reported third-quarter earnings this past week, investors had been hoping they would allay concerns that had been growing since the company released second-quarter numbers three months earlier. They did no such thing. While earnings topped expectations, third-quarter deliveries, sales, and profit margins all fell short of Street projections. Tesla shares slumped 6.7% following the release, putting them down 22% since the end of September, their second-worst start to a quarter since the first few weeks of 2016.But for all the bad news, Tesla sees massive growth in 2023, as new plants in Germany and Texas continue ramping up. Tesla’s long-term bets on batteries and new vehicles should also help it lower costs and boost sales, though it remains to be seen whether growth comes at the expense of profits.What’s more, Tesla still plans to deliver at least 450,000 vehicles during the fourth quarter, a massive number that, if achieved, would likely make the concerns disappear. While giving up on Tesla, or at least its stock, might strike some investors as the path of least resistance, giving the shares another three months seems to be the smart thing to do.The nervousness pervading Wall Street about Tesla is palpable. Since the electric-vehicle maker reported, the average analyst’s price target on its stock has slid more than 4%, to $287. Among the most pressing concerns: Gross automotive profits per car, excluding regulatory credits, have fallen from a record $15,700 in the first quarter to $14,700 in the second and $14,300 in the third from an average car price of $54,000.Arresting that profit decline is important, but Tesla also wants to hit its goal of 50% average volume growth in 2024, and that likely means a new manufacturing plant and introducing a lower-priced model to expand its market and fend off growing EV competition. The worry is that Tesla might end up looking more like Toyota (TM), which earns about $4,400 selling cars that average about $30,000 each, than the highly profitable company it is now. “The margin compression story is a worry and feeds into the bear thesis on Tesla,” says Wedbush analyst Dan Ives, who has an Outperform rating on the stock.New vehicles, however, are the future of Tesla. On the company’s conference call, CEO Elon Musk said that a vehicle platform supporting a $30,000 compact EV is now the primary focus of his development team. That’s for good reason—more than half of the cars sold in the U.S., excluding trucks, sell for under $36,000. “The new Tesla $30,000 compact is a big deal that investors may be missing,” says Future Fund Active ETF co-founder Gary Black. “It dramatically expands Tesla’s addressable market.”Also broadening that market, to a much lesser extent, is the much-delayed Cybertruck, set to hit roads in 2023—some 3.5 years after it was launched. It will have an estimated base price of $40,000 to $70,000, depending on configuration.Other Tesla businesses are expanding, as well. Tesla’s energy-storage deployments hit 2,100 megawatt hours in the third quarter, up from 1,295 in the third quarter of 2021. And Tesla said it has tripled production of its larger-size battery cells, dubbed 4680s, though the introduction of those is still behind schedule. Significant 4680 output “was not as far off as I feared,” says Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, who notes that these batteries will help drive down product costs and improve vehicle performance.Most important, while Tesla acknowledged that it won’t be able to deliver the 500,000 vehicles during the fourth quarter needed to hit 50% growth in 2022, guidance from CFO Zachary Kirkhorn implies that its fourth-quarter deliveries should top at least 450,000. That exceeds Wall Street projections and would be a quarterly record by some 100,000 units.A number in that range would make 50% volume growth in 2023 look feasible. It would also signal that margins are set to improve because efficiency and production speeds in Texas and Germany are rising, boosting the potential profit on each vehicle produced. “Short term, investors may focus on [margins] and demand being a little harder,” wrote RBC analyst Joseph Spak in a report following earnings. “However, midterm, we aren’t too worried about demand [and] see [a] path back to 30% [gross margin].”But first, Tesla has to get through the next week. Musk is likely to complete his purchase of Twitter (TWTR) before Oct. 28—if the U.S. government doesn’t block the deal—for $54.20 a share, something that would necessitate his selling $5 billion to $10 billion in Tesla stock to help fund the purchase.Investors don’t want to buy Tesla shares ahead of the large sale, which perhaps explains some of the stock’s recent weakness. With the deal set to close, Musk’s sales should be done soon. If the stock fails to hold around $200 through that sale, the downside risk is immense, says 22V managing director John Roque. “A break of $200 will suggest risk to $100,” he says.In all, a lot will be clearer in three months. If Tesla pulls through, that could be a good time for investors to pounce.","news_type":1},"isVote":1,"tweetType":1,"viewCount":338,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":4,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}