Tesla Stock is on Life Support: When Do We Buy?
It’s official: Tesla ($168.29|-1.11%) is the worst-performing stock in the S&P 500 so far in 2024. Are you happy now Tesla bears? How bad have things been for Tesla shareholders? For the year, the stock is down by nearly 35% and nearly 10% over the past 52 weeks. That might not seem so bad but the markets have been on a bullish rampage during that time. The S&P 500 has returned nearly 35% over that time and the NASDAQ has returned more than 40%. If you’ve hung on to Tesla until now, congratulations. Anyone who has bought the stock since it entered the S&P 500 in 2020 is now below water.
So what happened? Is it really just a rotation to the bright new shiny semiconductor stocks like NVIDIA ($877.35|6.18%)? Or is there something more to this story?
Truth be told, Tesla shareholders are likely growing impatient with CEO Elon Musk. Why? Because Musk has spent more time on X.com debating politics and wokeness than he has promoting Tesla. New model launches have routinely been two or three years later than first promised. The hype from the Cybertruck launch has waned and really was a nothing burger for the stock.
The Tesla Semi has been somewhat disappointing as well although more widespread adoption by companies could push this to be a higher revenue stream in the future. Tesla energy is growing and the Optimus Tesla Bot is on its way. But what is stopping this bearish downtrend?
When Should We Buy Tesla Stock?
The truth is, I don’t know. Perhaps the real question is: do you still want to buy Tesla stock? Don’t listen to the Tesla Bulls and certainly do not listen to the Tesla Bears right now. Let’s look at the facts.
Tesla is still the world’s largest EV maker and has a production scale that few automakers can ever rival. The company has the two best-selling EVs in history the Model 3 and the Model Y and is set to begin production of both the Tesla Roadster and Model 2 in the coming years.
On the flip side, EV uptake around the world has slowed and legacy automakers are reducing their EV output. Could it be that EV demand just isn’t as high as we once thought it would be?
Finally, if there are two things Wall Street hates it is declining growth and uncertainty for the future. Tesla is now being priced like a car company and not a technology or AI company. Sure there are plenty of things coming down the pipeline but nothing is an imminent catalyst for the stock.
As it stands, Tesla is likely to continue to see slowing growth heading into the end of the year. Until interest rates fall, Tesla will be priced like any consumer-facing stock. We’re still a couple of years away from the potential for hyper-growth again and a lot of that hinges on the Optimus Robot and the Model 2. As for now, I want nothing to do with going long on Tesla stock as much as it pains me to say it.
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