Tesla: My 13 Point Countdown

Aug. 07, 2023 9:42 AM ET Tesla, Inc. (TSLA)

Summary

• Tesla, Inc. stock has significantly outperformed this year, although the last month has jolted the stock a little.
• All stock-fundamental factors I evaluated have gotten worse since my last review.
• Market share, as a percentage, will inevitably be under pressure due to expanding market size and competitors.
• Despite short-term overvaluation concerns, I am staying with the stock as I believe Tesla is batting early in its innings.

Tesla: 13 Point Analysis and Rating

In this article, the author evaluates Tesla, Inc. (TSLA) based on 13 different factors and provides a rating for each factor to determine whether the stock has become more attractive or less attractive as an investment option. The analysis takes into account various business reasons, stock fundamental reasons, macro reasons, and technical reasons to assess the stock’s current position compared to three months ago.

Here’s a summary of the evaluation and ratings for each factor:

Four Business Reasons:

1. Margin Erosion: Tesla’s operating and gross margins have continued to be under pressure due to price cuts, leading to a “Stayed Same” rating.
2. Demand Erosion: Demand has improved due to price cuts and demand-based pricing, resulting in a “Gotten Better” rating.
3. Market Share: Tesla’s market share has decreased slightly, but the expansion of the market and increasing competition have impacted its share percentage, leading to a “Gotten Better” rating.
4. The Elon Musk Problem: Musk’s involvement and unpredictability remain the same, resulting in a “Stayed Same” rating.

Four Stock Fundamental Reasons:

1. Forward Multiple: Tesla’s forward multiple has almost reached 75, indicating that it has become more overvalued since the last review, leading to a “Gotten Worse” rating.
2. PEG: The Price-Earnings/Growth (PEG) multiple has worsened as the estimated growth rate increased relative to the stock price, resulting in a “Gotten Worse” rating.
3. Price Target: The stock’s proximity to the median price target has decreased, indicating a “Gotten Worse” rating.
4. Estimates: 2023 estimates have remained the same, but 2024 estimates have slightly decreased, resulting in a “Gotten Worse” rating.

Three Macro Reasons:

1. Market Complacency: Despite some volatility, overall market complacency has worsened, with a strong demand for “risk-on” stocks, leading to a “Gotten Worse” rating.
2. Recession or Fears of One: The economic uncertainty continues, leading to an unchanged “Stayed Same” rating.
3. China: Mixed reports and data on Tesla’s performance in China make it hard to draw a clear conclusion, resulting in an unchanged “Stayed Same” rating.

Two Technical Reasons:

1. Moving Average: Tesla’s 200-day moving average has shifted slightly, but the stock remains above it, leading to an unchanged “Stayed Same” rating.
2. RSI: Tesla’s Relative Strength Index (RSI) has decreased due to recent stock weakness, leading to a “Gotten Worse” rating.

Overall, the analysis indicates that most factors have either worsened or stayed the same since the last review. Despite this, the author still rates Tesla as a “Hold” due to their belief that Tesla is in the early innings of its growth. However, the author suggests that the stock is now less attractive compared to three months ago. It’s important to note that this is just one analysis, and investors should consider multiple perspectives and conduct their own research before making investment decisions.

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