What’s Happening to Tesla?
Tesla's performance is unnerving investors, although the outlook remains positive. The analysis by Simone Di Biase, Head of Relationship Management BG SAXO
The latest Wall Street sessions have left mixed signals. Growth in high beta stocks and growth stocks was generally expected, while defense and commodity stocks grew more.
To report what has happened and is happening to Tesla shares, on Monday the stock lost 8.6% in one session: the only mega-cap (the 40 largest stocks of the S&P 500) which fell by more than 1%. Much of this Tesla debacle was caused by the release of data on third-quarter deliveries, down from estimates (343,830 versus 357,938) due – according to official sources – to logistical problems. The focus remains high because now the electric vehicle manufacturer must produce 450,000 cars in the last quarter to reach the 50% annual target it has set. A truly uphill goal.
Were the logistical problems in the global automotive supply chain not enough, there are two other sources of risk. So far, Tesla has been immune from the cost of living crisis caused by the runaway energy crisis. On the contrary. In recent months, the stock has significantly outperformed in the global luxury goods sector (see chart below).
However, with high electricity prices and high inflation due to rising energy and food prices, demand is falling dramatically for many even successful consumer companies such as Apple, Nike and H&M. This is probably the biggest risk for Tesla's outlook as well, which until now are still very optimistic with analysts expecting revenue growth of 42% in 2023. A rosy vision that is difficult to accommodate considering the price trend. electricity and disposable income.
Furthermore, there are two further major obstacles to Tesla's growth. The first is the price of lithium which remains high and leads to an increase in the cost of batteries and therefore that of electric vehicles. This means that, also given the expected adoption curve for electric vehicles, we are facing a market that could remain contracted for years.
Another constraint is the physical electrical grid which needs a massive upgrade to manage all the new electric cars and air-to-water heat pumps. Both of these issues are beyond Tesla's direct control and, if not resolved quickly, could turn the 50% annual growth target into a vision with no connection to reality.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/tesla-cosa-sta-succedendo/ on Sun, 09 Oct 2022 14:48:24 +0000.