Tesla - Stock Analysis

Texas headquartered Tesla, is a solar energy, battery, and electric vehicle maker that operates six massive vertically integrated factories across three continents, Northern America, Europe, and Asia. The group hires more than 100 000 people whose teams design, build, and sell and service their products in-house. Its key customers are in the United States, China, and Australia.

Highlights (as at 14 February 2023):

Sector: Automobiles 
Price: $209.25
52-Week Range: $101.81-$384.29
Market Cap: $622.1 billion
Return YTD: 68.87%
Return (1-Year): -28.32%
Return (3-Years): 292.33%
Returns (5-Years): 873.84%
Beta: 2.11
Price-Earnings: 57.7x 
Dividend Yield: 0%
Founded: 2003
Headquarters: Austin, Texas 
CEO: Elon Musk 

The company reported mixed fourth-quarter results on January 25, exceeding earnings estimates but missing on revenue. Total revenues increased by 37% to $24,3 billion for the quarter, while earnings per share increased by 40% to $1.19. Automotive revenues (88% of total revenue) increased by 33%, automotive gross profit increased by 13%, however, the automotive gross margin contracted by 466 basis points to 25.9%, the lowest in five years of quarters as the company deals with price cuts for its vehicles amid lower consumer demand.

In mid-January, Tesla announced substantial price cuts in the U.S, Europe, and China which ranged from 6% to 20% for Model 3 and Model Y. A move it is well positioned to make, given its wide automotive profit margins. The price cuts have yielded positive results so far with deliveries for its cars up 18% from December.

Tesla faces strong competition in its second biggest market China, as electric vehicle maker BYD, which surpassed Tesla in 2022 in terms of global sales volumes. BYD offers more than 60 different versions of its EV and hybrid-cars, while smaller yet ambitious Nio plans to launch five new models this year. And although Tesla is the global EV leader it has lagged competitors in China in introducing new models and improving navigation systems.

The company’s two models in China (Model 3 sedan and Model Y crossover), have driven scale and costs down, however.

Technical Analysis:


Chart: Tesla Historical Share Price Chart (Source: ThinkTrader Web)

Tesla is currently trading above its 50-day moving average which is an important indicator of its recovery, but it continues to trade below its 200-day moving average on a daily chart.

The price has traded above the $200 level a few times in the past couple of weeks, but it is challenging to identify the right entry zone since this $200 level has acted as both a resistance and support level for a while.