One of the most outspoken investors on Wall Street is Ark Invest CEO Cathie Wood. Wood is known to take large positions in emerging technology businesses that she and her team believe have massive upside potential. However, like any other money manager, Wood faces her share of ba
In recent trading, shares of Tesla Inc (Symbol: TSLA) have crossed above the average analyst 12-month target price of $176.75, changing hands for $194.05/share. When a stock reaches the target an analyst has set, the analyst logically has two ways to react: downgrade on valuatio
It seems that for many investors, Tesla (NASDAQ: TSLA) is a company that can do no wrong. Despite publishing an earnings report that showed worrying declines in key metrics and a double miss on analyst estimates, the company's stock rose last week. According to data compiled by S
Below is Validea's guru fundamental report for TESLA INC (TSLA). Of the 22 guru strategies we follow, TSLA rates highest using our P/B Growth Investor model based on the published strategy of Partha Mohanram. This growth model looks for low book-to-market stocks that exhibit cha
(RTTNews) - Tesla Inc. (TSLA) has announced its plans to take the Cybertruck global tour to Europe, with the electric pickup truck set to visit 24 different cities across the continent.
Consumer stocks were advancing Monday afternoon, with the Consumer Staples Select Sector SPDR Fund (XLP) fractionally higher and the Consumer Discretionary Select Sector SPDR Fund (XLY) climbing 2.4%.
In trading on Monday, the Lithium ETF is outperforming other ETFs, up about 4.5% on the day. Components of that ETF showing particular strength include shares of Tesla, up about 12.2% and shares of Albemarle, up about 6.4% on the day.
And underperforming other ETFs today is t
Markets seem poised to end the week on a high note with both the S&P 500 and Dow Jones Industrial Average inching up after a rocky trading session yesterday.
Investors in Tesla Inc (Symbol: TSLA) saw new options become available today, for the June 7th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the TSLA options chain for the new June 7th contracts and identified one put and one call contract
The NASDAQ 100 Pre-Market Indicator is up 192.96 to 17,623.46. The total Pre-Market volume is currently 38,025,628 shares traded.The following are the most active stocks for the pre-market session: ProShares UltraPro Short QQQ (SQQQ) is -0.31 at $11.69, with 3,320,114 shares tra
Below is Validea's guru fundamental report for TESLA INC (TSLA). Of the 22 guru strategies we follow, TSLA rates highest using our P/B Growth Investor model based on the published strategy of Partha Mohanram. This growth model looks for low book-to-market stocks that exhibit cha
Uber Technologies, Inc. (UBER) posted its first full-year profit as a public company in 2023 by expanding its ride-hailing and delivery businesses while streamlining its operations at every turn.
Tesla (
NASDAQ:TSLA
)
surged after posting its Q1-2024 results. The stock rallied by 12% after its earnings were released and added an additional 5% the day after. Despite the notable two-day rally, shares are still down by more than 30% year-to-date. I am bearish on the stock and believe that its year-to-date trend is a better indicator of what’s to come than the stock’s recent post-earnings rally.
The Earnings Report Was Not Great
Tesla reported a 9% year-over-year revenue decline. That alone should spook many investors since the stock trades at a 43x P/E ratio. Even a 30% year-to-date drop does not change the fact that shares are overvalued.
It’s even worse when investors notice that the company’s GAAP net income attributable to common shareholders dropped by 55% year-over-year. Tesla cannot sustain its lofty valuation if it continues to lose market share in key areas like China. Other Chinese EV manufacturers are making it more difficult for Tesla to expand.
Competition is common among automakers, but it’s a thorn for Tesla more than any other. Other automobile stocks have much lower valuations, which gives them higher margins of safety.
Tesla needed to be perfect, and it was far from that in its latest earnings report. The move to offer more affordable vehicles may hurt profit margins, and the recent job cuts can make it more difficult for Tesla to achieve production goals.
Is Tesla a Tech Company?
When discussing the company’s earnings, Elon Musk focused on Tesla being a tech company rather than a car company. The company’s Q1-2024 slide deck mentions that the company increased its AI training compute by more than 130% in Q1 and reduced its FSD subscription to $99/mo.
Tesla has been selling subscriptions and software upgrades in its cars, but it still relies on cars to generate business. Total Automobile revenues came to $17.4 billion in Q1 2024 compared to
total revenues of $21.3 billion. Based on these numbers, more than 80% of the company’s revenue comes from selling automobiles.
Energy Generation and Storage revenue increased by 7% year-over-year, while Services and Other revenue jumped by 25% year-over-year. Those gains weren’t enough to offset declining Automobile revenue. Furthermore, those two segments depend on Automobile sales and retention to achieve high growth rates.
Tesla’s profit margins in the first quarter definitely resembled a car company. GAAP net income came to $1.3 billion compared to $21.3 billion in total revenue. Those numbers come to a 5.3% net profit margin.
Bad Optics with the Pay Package Request
Tesla has initiated cost cuts in an attempt to improve margins while maintaining productivity. Many corporations have been making similar moves, but for Tesla, it comes at a jarring time. Tesla is seeking approval from shareholders for Elon Musk’s $56 billion pay package.
It seems odd to reward a $56 billion pay package when the company only generated $1.3 billion in GAAP net income in Q1 2024. This move actively takes away significant funds from the company. For context, the top two highest-paid CEOs of 2022 took home over $200 million.
Three top Twitter executives received $122 million after Musk fired them. I’m sure many people thought that number was high when it came out, and it is. However, it further demonstrates the significance of a $56 billion pay package.
The pay package request doesn’t strike me as a move that values shareholders. It’s reminiscent of when Musk touted Dogecoin in 2021, only for the bubble to burst. He also got involved in an insider trading lawsuit related to Dogecoin.
What Musk does outside of Tesla normally shouldn’t matter. However, his willingness to pump Dogecoin and his pursuit of a $56 billion pay package amid cutting 10% of his workforce doesn’t suggest a focus on generating value for shareholders.
Is TSLA Stock a Buy, According to Analysts?
Analysts are on the fence with this stock. Tesla currently has a Hold rating. It’s split down the middle with the number of analysts with Buy recommendations versus the number of analysts with Sell recommendations.
Analysts have been assigning new price targets and reiterating their current stances. These price targets are spread across the board. Roth MKM believes Tesla is due for a 50% haircut, while RBC Capital is projecting a 72% upside from current levels. While many analysts are projecting for either extreme, some analysts are seeking price targets that suggest minimal upside or downside. Overall, the
average TSLA stock price target of $177.30 implies 4.2% upside potential.
The Bottom Line on Tesla Stock
Tesla is a car company that masquerades as a tech company. The company has tech components such as software and subscriptions, but more than 80% of its sales come from automobiles. It’s losing ground in big markets like China and has seen its net profits dwindle.
Despite the negative context, Musk is pushing forward with a proposal for a $56 billion pay package. These decisions do not suggest that the company is focused on rewarding long-term shareholders. The stock has impressive five-year gains, but the future does not look bright. The valuation is far too high for an automobile company that is losing ground.
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