Source: PaxForex Premium Analytics Portal, Fundamental Insight
Investing in Tesla requires a strong stomach, as the stock's movements can be quite volatile, causing concern for those unaccustomed to such fluctuations.
Following Tesla's recent earnings release, its stock surged by more than 10%. However, despite this uptick, the stock remains down by over 25% since the beginning of 2024.
The question arises: is this recent surge indicative of a new bullish trend for Tesla, or is it merely an exaggerated reaction?
When examining Tesla's performance, it's essential to recognize that its stock value is not solely determined by its current business performance. Future projects and product launches carry significant weight in influencing investor sentiment.
This is evident in Tesla's first-quarter results, which were less than stellar. Revenue experienced a 9% decline year over year, and the gross margin fell from 19.3% to 17.4%. This downward trend is concerning, particularly as Tesla's historically high gross margin used to distinguish it from other auto manufacturers, whereas now it aligns more closely with industry standards.
Tesla's recent earnings report painted a bleak picture, with declining revenue and shrinking margins resulting in a significant drop in earnings per share (EPS), down 53% year over year to $0.34. Of particular concern is the fact that Tesla's free cash flow has turned negative, indicating that the company is now spending more cash than it generates to sustain its operations.
Despite these alarming financial indicators, investors seemed to overlook these drawbacks during the conference call, focusing instead on the company's future prospects.
Investors have high hopes for Tesla, envisioning a future where all-electric vehicles dominate the market, with Tesla leading the charge. This vision extends to innovative technologies like automated taxis and semitrucks, although these concepts remain theoretical for now.
However, a significant event on the horizon is Tesla's unveiling of its robotaxi, dubbed the Cybercab, scheduled for August. This release carries considerable weight, as it aligns with Tesla's ambitions to capture a substantial share of the transportation market.
Tesla also hinted at accelerating its product launch timeline, with new vehicles expected to debut earlier than initially projected. Among these releases is a more affordable model, eagerly awaited by many investors. If Tesla can efficiently mass-produce electric vehicles at a lower cost, it could attract a broader consumer base, especially for short-distance commuting.
While investors' optimism about Tesla's future prospects is palpable, the company's current financial situation raises concerns. Whether to buy the dip ultimately depends on one's belief in Tesla's long-term vision. While Tesla's aspirations are impressive, the feasibility of achieving them hinges on broader market acceptance of electric vehicles.
As long as the price is above 160.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 167.79
- Take Profit 1: 184.00
- Take Profit 2: 198.00
Alternative scenario:
If the level of 160.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 160.00
- Take Profit 1: 146.00
- Take Profit 2: 136.00
