Truth Behind Tesla Stock: Should I Buy Now?

Tesla's (TSLA) stock experienced a remarkable surge in 2023, with its value soaring from $118 to $248, effectively more than doubling. However, since the dawn of 2024, there's been a noticeable downturn, with the stock price dropping by approximately 20%. This downturn is attributed to specific factors affecting Tesla's stock performance this year. Given these circumstances, is this the right time to invest in Tesla’s shares?

Peeking into Tesla’s Short-Term Prospects

Tesla's near-term prospects as of early 2024 have been influenced by a mix of challenges and strategic moves. Here are the highlights:

Stock Performance: Tesla stock has experienced a decline, falling around 30% in 2024. This is partly due to worse-than-expected fourth-quarter earnings and revenue reported in late January.

Earnings Projections: Analyst consensus has projected that Tesla's earnings in 2024 will be below the level achieved in 2023, indicating a potential year of negative growth for the company.

Analyst Ratings: Morgan Stanley analyst Adam Jonas cut his Tesla 2024 earnings projections by 25%, suggesting that Tesla could "potentially" lose money this year. Despite this, he maintained an overweight rating on the shares but reduced the price target.

Demand Issues: There are concerns about decelerating EV demand despite price cuts. Fleets are reportedly dumping EVs, and strong hybrid momentum is competing for the marginal EV buyer.

Q1 Delivery Expectations: As the first quarter of 2024 comes to a close, Tesla appears to be heading for a delivery miss, with Wall Street consensus still having Q1 deliveries of 487,000 units, but many analysts have cut predictions recently.

Production and Delivery: Tesla hit a record 484,507 deliveries in Q4 2023, but the previous quarterly delivery record was in Q2 with 466,140.

Strategic Focus: CEO Elon Musk has indicated that Tesla is focused on ensuring that its next-generation vehicle, energy storage, full self-driving, and other projects are "executed as well as possible".

Competition: Tesla is facing increased competition from other EV players like Rivian(RIVN), which has unveiled new product lines and has received positive sentiment around its R2 and R3 vehicle reveal event.

Market Sentiment: Despite the challenges, some investors and analysts remain optimistic about Tesla's long-term prospects, particularly with the potential impact of AI technology on productivity growth.

Collectively, Tesla's immediate outlook presents a blend of challenges and opportunities. On one hand, financial hurdles and demand concerns pose significant risks. On the other, strategic initiatives and a vision for long-term growth offer substantial promise. Learn how is Tesla planning to address the concerns about decelerating EV demand and competition from other EV rivals.

Navigating Tesla’s Long-Term Opportunity

While Tesla's short-term horizon might not spark much excitement, its long-term prospects shine brightly, driven by several critical factors, including market value growth, competitive landscape, production capabilities, and innovation. Below is an overview of the essential insights based on the most recent information available:

Expansion of Manufacturing Capacity: Tesla's current assembly capacity includes significant production capabilities across multiple locations, with plans to further expand, especially with the upcoming Mexico plant. This expansion is expected to allow Tesla to build more than 2 million vehicles by 2024 and potentially another million with the Mexico project's completion, assuming demand is there for the cars.

Introduction of Affordable Models: Tesla is planning to introduce a more affordable $25K car model by 2025. This move is anticipated to open up a new market segment for Tesla, potentially increasing its market share and driving future growth.

Innovation and Cost Reduction: Tesla is known for its innovation and has been working on ramping up the production of its own batteries. The company is also planning to refine lithium for its production needs, which could further drive down costs per vehicle. Additionally, Tesla has been teasing a lower-priced EV, expected to be announced late in 2024, which could be a catalyst for growth. Intellectia.AI provides some insights on Tesla’s upcoming lower-priced EV and its potential impact on the company’s long-term growth.

Brand Strength and Market Share: Tesla has a strong brand identity and is led by CEO Elon Musk, who is a significant figure in the industry. The company's vehicles are known for great looks and performance, and it has been profitable at a price that many consumers can and do pay.

Software and Services: Tesla has the potential to increase profitability through the sale of software and services, such as its full self-driving package. This high-margin source of revenue growth could become more significant as features are added and encourage more Tesla owners to purchase these options.

Analyst Expectations: Despite short-term challenges, analysts remain optimistic about Tesla's long-term growth potential. Ark Invest, for example, has a price target of $2,000 per share for Tesla in 2027, with bull and bear cases at $2,500 and $1,400 per share, respectively.

However, it is important to note that Tesla also faces risks and challenges:

Competition: The electric vehicle market is becoming increasingly competitive, with Chinese companies like BYD already producing more electric vehicles than Tesla. Tesla will need to maintain its competitive edge to continue growing.

Market Saturation & Demand: As the EV market matures, high growth rates may be harder to sustain. Tesla will need to ensure that its vehicles remain attractive to a broader consumer base, especially as it moves into more price-sensitive segments.

Economic & Regulatory Factors: Changes in economic conditions, interest rates, and government policies can impact Tesla's growth. For example, Tesla's margins may be affected by the speed at which interest rates fall.

Overall, Tesla's long-term potential looks promising, yet there are critical details worth delving into. Let’s discover how Tesla's strategic expansion of production capabilities across various global locales is shaping its market share and bolstering its prospects for sustained growth on Intellectia.AI.

Is Tesla’s Stock Good to Buy?

While Tesla faces short-term hurdles, its narrative of long-term growth is unchanged. However, purchasing the stock at its current valuation could subject investors to undue risks amid today's unpredictable economic climate. New investors might do well to steer clear of buying shares at the moment. Existing shareholders, on the other hand, might find value in holding onto their investment for the long haul, provided they are prepared to weather any short-term volatility.