Tesla Stock (TSLA): Look Who’s Back!
Now, I don’t want to jinx anything for the Tesla (NASDAQ: TSLA) bulls, but it looks like the stock is back in the good graces of Wall Street. Earlier this week, Tesla reported earnings and as I wrote about last week, it was nothing to write home about. The company missed on both earnings and revenue and saw a dramatic drop to negative free cash flow for the quarter. If the stock wasn’t already down by more than 30% this year, it would have imploded.
But it turns out, that when a stock falls continuously for four months, sentiment is a little different. Shares of TSLA are up by nearly 15% this week in what has easily been Tesla’s best week in 2024. So are we back? Or is this just a bounce that will fade when the bullishness from Elon’s conference call is baked into reality? Let’s take a deeper look at what the short-term future for Tesla’s stock holds and why I’m not quite ready to buy back just yet.
Tesla Earnings: A Lot of Speculation and Smoke
Even the strongest Tesla bulls need to admit that everything about the stock and the company right now is based on speculation. Musk says that the cheaper Model 2 is closer than we think indicating that production could begin as soon as early 2025. While this would certainly be a positive, we do have to acknowledge that margins are much lower on cars with a cheaper sticker price. And if the long-term plan for Tesla is to make money on FSD subscriptions and not cars, then how does a cheaper vehicle help its bottom line?
FSA and robotaxis or cybercabs as Musk referred to them, are also on the way. The big unveil is still scheduled for August but Musk did show a preview of the cybercab mobile app which definitely got investors excited. Even I’ll admit that was a cool touch but again, nothing concrete and nothing super officially imminent.
The energy segment is starting to bring in some real revenues and the margins on that business are far better than for its cars. I still think the energy business is a sleeping giant for Tesla and that is one reason I am still somewhat bullish moving forward.
TSLA Stock Outlook
So where do we go from here? Tesla temporarily stopped the bleeding but until Musk is able to deliver some of these promises, the company is in limbo. This is exactly what I wrote about previously in that the company is stuck between growth cycles and that’s okay. In the meantime, we await things like cybercab or Optimus robot and add to our positions or sell and look for other opportunities.
Personally, I’m not doing either right now. I understand why bulls are celebrating on social media but I am starting to see some lofty price targets again. It has been less than one good week for the stock and people are already counting their chicks before they’ve hatched. I’m cautiously optimistic but I’m at the point where I need to see it to believe it.
Rate this article