Is Tesla Stock a Buy Right Now?

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Written By Joel Gbolade

As we entered 2024, Tesla (TSLA) stock experienced a notable slump, marking a stark contrast to its impressive doubling in the previous year.

This downturn occurred in anticipation of the fourth-quarter earnings and revenue report, during a time when analysts were revising their profit estimates downwards for the final months of 2023.

Record-Breaking Deliveries vs. Analysts’ Muted Response

Despite this, Tesla started the year with a positive announcement on January 2nd. The company reported surpassing Wall Street’s predictions in the fourth quarter, setting a new record for vehicle sales and meeting its full-year expectations.

Credit: DepositPhotos

Specifically, Tesla delivered a staggering 484,507 vehicles in the fourth quarter, culminating in a total of 1.81 million vehicles for 2023. This achievement slightly exceeded their target of 1.8 million.

Despite these impressive figures, analysts remained cautiously focused on the year-end earnings and the potential profit challenges for 2024.

Read More: How the AI Revolution May Impact the Stock Market in 2024

Tesla’s Stock in January: Declining Amidst Expectations

In the early days of January, Tesla’s stock has seen a decline of over 11%, falling below crucial support levels. This trend reflects the market’s anticipation regarding auto gross profit margins (excluding regulatory credits) and the stability of vehicle pricing.

With the upcoming Q4 earnings, investors are keenly questioning the optimal timing to buy or sell Tesla stock, given the current market conditions and future outlook.

Tesla’s Vehicle Production and Delivery in Detail

During the fourth quarter, Tesla produced a significant number of Model 3/Y vehicles, totaling 461,538 units, alongside 22,969 units of other models.

The company’s portfolio currently includes the Model 3, Model Y, Model S, Model X, and the much-anticipated Cybertruck. The previous quarterly record was set in Q2, with 466,140 vehicles, followed by a delivery of 435,059 units in Q3.

Wall Street Forecasts and Expectations

As we await the full-year and fourth-quarter earnings and revenue report on January 24th, Wall Street’s forecasts are mixed.

Analysts expect a 39% decrease in EPS to 73 cents and a 5% increase in revenue to $25.61 billion for Q4. The full-year prediction for 2023 includes a 25% dip in earnings to $3.07 per share and a 20% increase in sales to $97.46 billion compared to 2022.

Looking forward, expectations for 2024 suggest earnings may stay below the levels achieved in 2022.

The Launch of Cybertruck Amidst Earnings Concerns

Notably, on November 30th, Tesla introduced the Cybertruck at an event in Austin, Texas, with much fanfare.

Elon Musk proudly declared the vehicle as a triumph over skepticism. The Cybertruck, available in three versions, ranges in price from $60,990 to $99,990 and offers varied features based on the model.

Despite the launch, Tesla’s stock reacted negatively to the less-than-expected Q3 earnings and revenue reported on October 18th, emphasizing the challenges Musk mentioned regarding the Cybertruck and the broader economic context.

Tesla’s Strategic Moves and Market Reactions

Throughout 2023, Tesla made several strategic decisions, including aggressive price cuts and discounts to maintain sales momentum.

However, these moves led to a decline in auto gross margins, sparking concerns among analysts.

Additionally, Tesla’s stock fluctuated significantly, influenced by various factors, including Musk’s activities on social media and his acquisition of Twitter.

Also Read: How Do Small Cap Stocks Move Differently to Large Cap Stocks?

Tesla’s Position in the Global Market

As 2023 concluded, Tesla maintained strong sales momentum in China, but faced increasing competition from Chinese EV makers like BYD, which surpassed Tesla in global BEV deliveries in Q4.

Credit: DepositPhotos

Tesla’s plans to revamp the Model Y in China and introduce a new Model 3 variant indicate its efforts to stay competitive in the rapidly evolving market.

Regulatory Pressures and Future Prospects

Entering 2024, Tesla faces increased scrutiny from regulators in various countries due to reported issues with suspension and steering parts.

This scrutiny could lead to potential recalls and impact the company’s reputation. Additionally, Tesla’s focus on launching a $25,000 next-generation electric vehicle represents a significant bet on the future, with Musk hinting at revolutionary manufacturing methods to reduce costs.

Tesla’s Stock Outlook and Industry Impact

As Tesla navigates these challenges and opportunities, its stock has shown volatility. In January 2024, TSLA shares tumbled further, reflecting investors’ concerns over various factors, from production issues to regulatory challenges. Despite these fluctuations, Tesla’s stock remains a subject of interest in the market, given its historical performance and Elon Musk’s influence on the auto industry.

Musk’s Leadership: Transforming the Auto Industry

Elon Musk, with his vision and leadership, has significantly transformed the auto industry, pushing it towards electric vehicles.

This transformative impact is a key reason why Tesla has been a powerhouse in the stock market, especially during its exceptional rise from mid-2019 to late 2021. Tesla’s ability to innovate and disrupt has made it a focal point for investors and industry observers alike.

Current Investment Perspective on Tesla Stock

As of now, Tesla stock may not be in the ideal position for buying, according to market analysis.

Despite its past successes and potential for future growth, the current market conditions, along with internal and external challenges, make it a complex investment choice.

Investors are advised to closely monitor Tesla’s performance, especially in the context of its upcoming vehicle launches, market competition, and regulatory environment.

Conclusion: Tesla at a Crossroads

In summary, Tesla stands at a crucial juncture at the beginning of 2024. With its ambitious goals, groundbreaking products like the Cybertruck, and a visionary leader, Tesla remains a significant player in the auto industry.

However, the company must navigate market uncertainties, competitive pressures, and regulatory challenges to maintain its growth trajectory and investor confidence.

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