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Tesla's Q1 earnings: Boon or bane for its global price cuts?
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Where is the BOTTOM of Tesla's stock?

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To the Moo joined discussion · Apr 24, 2023 03:58
If Tesla shares fall back to $100, investors can buy more, and when the shares are at $150 or $160, investors can hold on to the stock.
After a two-day delay, SpaceX launched the most powerful starship system ever built by man from Texas. The Starship successfully took off from the launch pad, but about four minutes after launch, the booster and the ship failed to separate from each other.
Simple summary: it blew up.
Source:Network
Source:Network
The same "bomb" also overnight $Tesla(TSLA.US)$'s stock price. After delivering a less-than-expected quarterly earnings report, Tesla's stock price plunged nearly 10% on the next day. The investors around also asked again and again: Can we buy the dip this time?
To answer this question, we need to know:
First, where is the bottom for Tesla?
As we mentioned in "Tesla's disappointing Q1 earnings:Is it time to buy or sell?’Tesla's stock price fell to its lowest point in nearly three years on January 6, 2023: $101.81.
Source:MooMoo
Source:MooMoo
The background at the time was:
1. Catastrophic hyperinflation and Fed rate hikes dampened auto consumption, forcing Tesla to cut prices in succession to boost sales, and the electric vehicle market was highly competitive;
2. The Q4 2022 financial report showed a third consecutive quarter of weaker-than-expected deliveries and overcapacity;
3, Musk's own irresponsible stock sales and distracted governance tweets have added to investor discontent.
These factors undoubtedly foreshadow the end of Tesla's high-growth and high-margin expansion period, so investors voted with their feet.
But by now, inflation has fallen and the Fed's interest rate hike cycle is coming to an end, signaling a better macro environment than last year's margins;
Q1 margins are less than expected, but quarterly sales growth remains high year-over-year, and the inventory overhang problem is no longer apparent;
the Twitter acquisition has been settled, and with Zhu replacing Musk on the front stage, Tesla's management has entered a stable period.
Since there is no expectation of worse fundamentals than at the beginning of the year, there is also a good chance that Tesla's stock price will not return to the lows of the beginning of the year.
In addition, Tesla shares were now approaching a very critical level on the daily chart: the March low of $163.91.
Source:MooMoo
Source:MooMoo
From a technical perspective, this is a very important support level. Simply put, a significant drop below the March low could trigger a continued move downward, but a rebound back above the 30-day and 60-day moving averages would indicate that the stock would begin to stabilize, which is exactly what happened last month.
Second, where is the top of Tesla?
The disappointing Q1 earnings report led analysts to cut their price targets for Tesla, but most maintained their Buy ratings.
Barclays downgraded its price target to $230 from $275, with a Buy rating. Analysts noted that the pursuit of volume growth through price cuts is expected to come at the expense of margins, but the company's vertically integrated scale could offset some of the downside".
Wedbush: Lowered Tesla price target from $225 to $215. Rating remains at Hold. Analysts remain very bullish on the company's long-term growth. Think Tesla posted "mixed results" in its latest earnings report, acknowledging that the "elephant in the room" is "declining margins. However, Musk's strategy of sacrificing margins to ensure long-term demand growth will pay off in the long run.
Other investment banks also include:
Goldman Sachs lowered its price target from $210 to $185, maintaining a Buy rating.
Wells Fargo maintained its Buy rating on Tesla and lowered its price target from $190 to $170.
Deutsche Bank lowered its price target on Tesla from $250 to $200, maintaining a Buy rating.
Mizuho lowered its price target on Tesla to $230 from $250.
Morgan Stanley lowered its price target on Tesla from $220 to $200, maintaining a Hold rating.
J.P. Morgan maintained its Sell rating on Tesla, lowering its price target to $115 from $120.
Over the past three months, 31 Wall Street analysts have rated Tesla, and many still believe the stock can outperform the broader market. Many still believe the stock can outperform the broader market and forecast its target price to average $208.56.
Source:MooMoo-TSLA-Analysis-Interpretation
Source:MooMoo-TSLA-Analysis-Interpretation
Of course, the most optimistic is Tesla's iron fan, star fund manager Cathie Wood.
In the Tesla stock price due to the negative earnings plunge of nearly 10% of the time, Cathie Wood stand out in support of Tesla, said with the booming development of self-driving taxi, Tesla shares may reach $ 2000 in five years.
On the same day, the Tesla pricing model updated by Ark Investments, a subsidiary of Cathie Wood, showed that in the benchmark scenario, Tesla's expected value per share in 2027 will reach $2,000, which is 1127% higher than Tesla's closing price of $162.99 on last Thursday.
According to the model, the "expected value" is the average of all 1 million simulations. In a bullish (75th percentile) and bearish (25th percentile) scenario, Tesla's expected value per share in 2027 is approximately $2,500 and $1,400 per share, respectively.
Source:Ark
Source:Ark
Cathie Wood is not only "mouth bullish", Thursday her fund ARKK and ARKW bought a total of 256,000 shares of Tesla stock, according to the closing price of $162.99, worth $41.7 million (about RMB 287 million), can be said to be a big deal.
Conclusion
Is Tesla's stock price expensive today? The answer depends on whether it can keep up its past earnings growth rate.
Wall Street previously generally believed that Tesla's revenue could grow by nearly 40% in 2023; more optimistic analysis even believed that Tesla could achieve 50% revenue growth and keep the high growth going for years.
If Tesla is able to maintain profitability and achieve revenue growth as the bulls expect, then the shorts are wrong, meaning that Tesla's current stock price level is a good time to bottom out.
In addition, Musk is banking on fully automated driving (FSD) to be Tesla's next profit driver. But one doubts how soon Tesla will roll out FSD: "It's kind of like the boy who cried wolf, except in our story, the wolf would be a good thing that never seems to come."
Of course, it may be that, as Kim Forrest, chief investment officer at Bokeh Capital Partners, says, many investors are not investing in Tesla, but in Elon Musk. So for the true believers in Musk and Tesla, their faith will remain intact even if they don't launch an FSD, Cybertruck or a new, more affordable electric car this year.
All in all, the market may punish Tesla stock in the short term for the less-than-expected latest earnings report, but for those who have been investing for longer or have faith in Tesla, this becomes an opportunity to buy the stock now.
After all, Tesla's stock has had more than one "crazy" doubling in its history.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more
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