Analyzing Tesla Stock Performance and Future Prospects: Buy or Sell?


In 2024, Tesla’s (TSLA) stock has seen a decline after its impressive doubling last year. Following a disappointing fourth-quarter earnings report on January 24, the EV giant’s stock dropped by an additional 10%. Analysts now predict that Tesla earnings for 2024 will be lower than those of 2023, indicating another year of negative growth for this once high-flying stock.

According to FactSet, Wall Street anticipates Tesla’s earnings per share to be $3.07 for 2024, a 1% decrease compared to last year’s $3.12. This marks a significant drop from 2022, where earnings were $4.07 per share. Although analysts foresee a rebound in 2025 to $4.24 per share, their projections have been revised downward from previous estimates, signaling a cautious sentiment among investors.

Recently, Gary Black, managing partner of the Future Fund, remarked that Tesla’s slipping market capitalization has led investors to no longer consider it part of the elite “Magnificent 7.” This departure from its previous status as a symbol of innovation and growth is viewed as a loss by many in the investment community.

As of now, Tesla’s stock has retreated by nearly 26% in 2024, falling below crucial support levels. With CEO Elon Musk’s cautious outlook for the year ahead, including uncertainties around auto gross profit margins and vehicle pricing stability, investors are left wondering about the opportune moment to buy or sell Tesla stock.

The disappointing fourth-quarter earnings report further dampened investor sentiment, leading to a downward revision of profit projections for 2024. Longtime Tesla supporter Dan Ives characterized the earnings call as a “train wreck,” as Tesla reported a 40% decline in Q4 earnings and a slight increase in revenue compared to the same period last year.

Tesla’s outlook for 2024 suggests that the growth rate in vehicle volume may not match that of 2023, as the company focuses on the launch of its next-generation vehicle at Gigafactory Texas. While CEO Elon Musk remains optimistic about the future, citing upcoming projects and expansions, the lack of specific details has contributed to a bearish sentiment among many Tesla bulls.

Tesla Stock No Longer A ‘Best Idea’

Following the earnings report, Wedbush Securities no longer considers Tesla stock as one of their “best ideas” for 2024. Analyst Dan Ives outlined several areas that Tesla and CEO Elon Musk need to address for TESLA to regain its position.

Ives stated that Tesla will remain off Wedbush’s list of best ideas until there is tangible evidence that Musk and the company are taking action on their suggestions. Among the ten items outlined by Ives for Musk to turn Tesla around, Wedbush urges Tesla to announce a $10 billion share buyback program, establish a holding structure for AI initiatives with increased control for Musk, cease vehicle price cuts to maintain margin leverage against other automakers, provide assurances that Musk won’t sell more TSLA stock to fund other projects, and offer a clear production and delivery timeline for the Model 2 and a sub $30k vehicle by 2025.

Analysts Voice Tesla Concerns

Despite Ives being one of Tesla’s most optimistic supporters, he reduced his price target for Tesla to $315, down from $350.

Analysts have expressed concerns about Tesla’s performance, particularly regarding the lack of strategic and financial clarity during the recent earnings call. Dan Ives remarked that he and others were mistaken in expecting Tesla’s leadership to provide a comprehensive overview of ongoing price cuts, margin structures, and fluctuating demand.

Similarly, Morgan Stanley analyst Adam Jonas, despite being bullish on Tesla, noted that the outlook for 2024 was the least detailed he could remember. He warned that Tesla’s profitability might decline to around $2 per share, leaving investors and analysts largely in the dark about revenue and growth prospects for the fiscal year.

Toni Sacconaghi of Bernstein also emphasized the challenges ahead for Tesla in 2024, suggesting that the outlook for 2025 might not be any better.

Despite these concerns, Tesla reported record deliveries in Q4, including 461,538 Model 3/Y vehicles and 22,969 units of other models. This achievement surpassed the previous quarterly delivery record set in Q2. However, Tesla fell short of its target to deliver 1.8 million vehicles in 2023, with Wall Street consensus estimates just below that mark according to FactSet.

Cybertruck Event

The optimism that characterized the end of 2023 was preceded by the excitement generated by the Cybertruck event on November 30th. During the event held at its Austin, Texas factory, Tesla unveiled the Cybertruck amidst great fanfare.

Addressing the crowd, CEO Elon Musk highlighted the remarkable achievement of bringing the Cybertruck to fruition despite initial skepticism. The Cybertruck, available in three trims, marks a significant milestone for Tesla.

The rear-wheel drive version, priced at $60,990 with a range of 250 miles, is set to be released in 2025 according to Tesla’s website. Meanwhile, the all-wheel drive variant starts at $79,990, offering a range of 340 miles. Additionally, Tesla introduced the high-end Cyberbeast trim, starting at $99,990 with a range of 320 miles. Both the all-wheel drive version and the Cyberbeast are slated for delivery in 2024.

Notably, four years ago, Tesla had announced a starting price of $39,900 for the Cybertruck, reflecting the evolution and adjustments made in the pricing strategy over time.

Tesla Stock Falls Amid Growth Concerns

Towards the end of 2023, there was a shift from excitement to pessimism following the highly anticipated Cybertruck event on November 30th. Tesla celebrated the occasion by delivering 12 Cybertrucks at its Austin, Texas factory, accompanied by much fanfare.

Addressing the crowd, CEO Elon Musk emphasized the remarkable feat of bringing the Cybertruck to life despite initial doubts from experts. Tesla introduced three trims of the Cybertruck, each catering to different preferences and needs.

The rear-wheel drive version, starting at $60,990 with a range of 250 miles, is slated for release in 2025 according to Tesla’s website. Additionally, Tesla unveiled the all-wheel drive variant, priced at $79,990 with a range of 340 miles, and the high-end Cyberbeast trim, starting at $99,990 with a range of 320 miles. Both the all-wheel drive version and the Cyberbeast are expected to be delivered in 2024.

It’s worth noting that four years ago, Tesla had initially announced a starting price of $39,900 for the Cybertruck, illustrating the adjustments made in pricing over time.

However, amidst the Cybertruck excitement, Tesla faced challenges in the stock market following disappointing Q3 earnings and revenue announcements on October 18, 2023. Third-quarter earnings dropped by 37% to 66 cents per share, marking the lowest figure in two years for CEO Elon Musk. Despite a 9% increase in quarterly revenue to $23.35 billion, Tesla’s auto gross profit margins, excluding regulatory credits, declined to 16.3%. Musk also cautioned investors about challenges ahead, including those related to the Cybertruck’s production and the broader economic landscape, contributing to a 9.3% drop in Tesla’s stock price the following day.

Musk mentioned that it would take 12-18 months before the Cybertruck becomes a significant positive cash flow contributor, highlighting the substantial hurdles involved in ramping up production to meet demand. He projected Tesla to produce around 250,000 Cybertruck units annually by 2025.

Tesla Stock And Musk

For Tesla and Musk, there’s always something happening, and their stories are closely intertwined. In October 2022, Musk made headlines by acquiring Twitter for a whopping $44 billion, sparking concerns among long-time Tesla investors about his divided attention and the potential impact on Tesla’s stock performance.

To alleviate these concerns, Musk made strategic moves, such as hiring Linda Yaccarino, NBCUniversal’s advertising chief, as the new CEO for X Corp., formerly known as Twitter. Musk clarified that Yaccarino would handle business operations, allowing him to focus on product design and innovation, which eased worries among analysts like Dan Ives from Wedbush, who saw this as a positive development reducing distraction risks surrounding the Tesla narrative.

However, Tesla’s stock experienced a setback on November 16th, slipping below a crucial technical level after a rapid four-day rally of nearly 18%. This decline coincided with controversial comments made by Musk on Twitter in support of an antisemitic post, stirring further market volatility.

In January, Musk expressed his desire to increase his stake and voting power in Tesla before steering the company towards leadership in AI and robotics. He emphasized the importance of having around 25% voting control to ensure influence without jeopardizing the company’s governance.

Later, on February 3rd, the Wall Street Journal reported that some Tesla board members felt pressured to partake in drug use with Musk. The detailed report also highlighted concerns raised by friends about Musk’s well-being and the independence of the board from his influence.

Year-by-Year Overview (2019-2024)

According to calculations by the comparison team from CasinospotFR, an overview of Tesla’s stock prices at the beginning of each year from 2019 to 2024 was provided.

2019: The price was around $20.41. This reflects the price per share after adjusting for the 5-for-1 stock split that occurred with Tesla.

2020: At the beginning of 2020, Tesla’s stock price was approximately $28.30. Tesla started the year on a strong note after a rally at the end of 2019, driven by positive news about production and financial results.

2021: Tesla’s shares opened the year at around $271.43. This significant increase reflects the sharp rise in Tesla’s stock prices during 2020, caused by consistent profitability, achievements in battery technology, and inclusion in the S&P 500 index in December 2020.

2022: At the beginning of 2022, the stock price was about $382.58. This price reflects the ongoing dynamics and enthusiasm of investors regarding Tesla’s growth prospects, despite broader market volatility.

2023: The stock price at the beginning of 2023 was about $173.68. In 2022, the shares experienced fluctuations influenced by various factors, including market conditions, supply chain issues, and Tesla’s business development.

2024: $251.25.

Year Stock Price at Beginning of Year (USD)
2019 20.41
2020 28.30
2021 271.43
2022 382.58
2023 173.68
2024 251.25

Next-Generation Electric Vehicle On The Way?

In the meantime, Musk and Tesla seem to have their sights set on developing a next-generation electric vehicle priced at $25,000.

According to Reuters, Tesla has informed its suppliers of its intention to kick off production of a new mass-market vehicle, internally referred to as “Redwood,” by mid-2025.

“We’re making significant progress on our next-generation low-cost vehicle,” Musk announced during the Q4 earnings call.

Musk mentioned on Wednesday that Tesla is aiming to commence production in the latter half of 2025. However, he advised caution, suggesting that his remarks be taken with a pinch of salt.

Throughout 2023, Tesla has reported ongoing advancements on its next-generation platform, although specific details about the vehicle have been scarce. At last spring’s annual shareholder meeting, Tesla provided a glimpse of the vehicle’s silhouette.

On January 24th, Musk confirmed that the initial production line for the next-generation Tesla vehicle will be set up at its Texas facility. While Tesla initially proposed manufacturing the vehicle in Mexico, those plans have been put on hold.

The timeline for the commencement of deliveries for the next-generation vehicle remains uncertain. Musk has promised “revolutionary” manufacturing techniques to reduce costs, but the development of such technologies may take considerable time.

Additionally, it remains unclear whether Tesla’s next-gen EV will qualify for tax credits, depending on its battery sourcing. The Model 3 no longer qualifies for the $7,500 IRS credits.

Conclusion

The analysis of Tesla’s stock performance and future prospects presents a complex picture for investors. The decline in Tesla’s stock in 2024, coupled with disappointing earnings reports and revised projections, has led to a cautious sentiment among investors and analysts. The departure of Tesla from the elite “Magnificent 7” and the exclusion of its stock from Wedbush’s list of best ideas reflect the challenges facing the company.

While Tesla’s CEO Elon Musk remains optimistic about the future and emphasizes upcoming projects and expansions, concerns persist about the lack of strategic clarity and financial transparency, as highlighted by analysts like Dan Ives and Adam Jonas.

Despite these concerns, Tesla continues to report record deliveries and advances in its next-generation electric vehicle initiatives, such as the Cybertruck and the Redwood project. However, uncertainties surrounding production timelines, profitability, and governance issues raise questions about the company’s ability to regain its position as a leader in the electric vehicle market.

In light of these factors, investors should carefully weigh the risks and opportunities associated with investing in Tesla stock. While the company’s innovative spirit and potential for long-term growth remain compelling, the current challenges and uncertainties warrant a cautious approach. As such, investors should conduct thorough research and consider their risk tolerance before making any decisions to buy or sell Tesla stock.For those interested in exploring alternative avenues for entertainment and engagement, platforms like HraiGamble offer options for online gaming and leisure activities

 











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