Source: PaxForex Premium Analytics Portal, Fundamental Insight
Tesla's recent quarterly production and delivery update demonstrate the company's continued strong performance. During the second quarter, they produced close to 480,000 electric vehicles (EVs), and their deliveries surged by an impressive 83% compared to the previous year.
As a result of these positive developments, analysts have increased their share price targets and earnings estimates for Tesla. However, it's worth noting that the stock has already more than doubled in value since the beginning of the year and has seen a significant 50% increase in the past three months.
Given these factors, investors may be pondering whether it's the right time to buy, sell, or simply hold Tesla stock. To make an informed decision, it's essential to consider additional factors beyond the recent update.
Tesla's stock has historically not followed traditional valuation metrics, and its price-to-earnings (P/E) ratio had come down to more reasonable levels in the mid-20s earlier this year due to strong earnings and a correction in the stock price. However, the overall market rebound, especially for Tesla, has driven the share price back up to high levels.
Investors remain optimistic about Tesla's future earnings potential, attributing the company's growth prospects to its current market position. Despite an increasing number of competitors entering the electric vehicle (EV) market, Tesla still maintains approximately 60% market share in the U.S. Although it is expected that this dominant share may decrease over time, Tesla's presence in other markets, like China, indicates that it can still capture a significant portion of the battery electric and plug-in hybrid market.
While the US EV market still has a low penetration rate of less than 7%, Tesla's ambitious goal of achieving 50% annual production growth seems achievable for several more years. After the surprising second-quarter data, the company is well-positioned to exceed its estimated 1.8 million units of production for 2023. Moreover, Tesla's revenue streams are not solely dependent on vehicle sales; there are other avenues for revenue growth in the company's future.
Tesla's energy business has become a significant focus for investors, with revenue from energy generation and storage experiencing remarkable growth of nearly 150% year over year, surpassing $1.5 billion in the first quarter. This segment now accounts for about 6.5% of Tesla's total revenue and is expected to continue expanding, given the company's substantial investments in facilities located in Nevada and California.
Another noteworthy segment that investors should pay close attention to is Tesla's "services and other revenue," which includes the revenue generated from its Supercharger network. In the first quarter, this segment also demonstrated strong growth compared to the previous year and contributed around 8% to the company's total revenue.
Moreover, Tesla has taken a significant step by allowing non-Tesla brands such as Ford, General Motors, Rivian, and Volvo to use its Supercharger network through agreements that have been reached. While the specific terms of these deals have not been disclosed, opening up the proprietary charging network to competitors is expected to drive even higher revenue in this segment.
The convenience and reliability of Tesla's Superchargers have been major selling points for the company, attracting many EV buyers to their brand. Now, with the network being accessible to other manufacturers, it may aid competitors in promoting their own growing EV offerings. However, given the projected surge in EV adoption, most industry observers believe that the positive contributions from the services segment will outweigh any potential benefits provided to competing manufacturers.
As a long-term investment, Tesla's charging and energy businesses present additional opportunities that attract the interest of long-term investors. Those who may require their investment capital in the near future might consider selling some Tesla stock after its recent impressive performance. On the other hand, for investors seeking future gains, holding or even adding new shares to their portfolio is a sensible decision at this point. The continuous growth in revenue and earnings from Tesla's services segment makes it crucial for investors to monitor its development closely in the months and years to come.
As long as the price is above 250.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 280.43
- Take Profit 1: 290.00
- Take Profit 2: 300.00
Alternative scenario:
If the level of 250.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 250.00
- Take Profit 1: 240.00
- Take Profit 2: 230.00
