Tesla, Inc. (NASDAQ: TSLA) stands as one of the compelling narratives of the year, eliciting diverse perspectives among investors.
The dichotomy between those captivated by Tesla’s visionary strides in autonomous driving and cutting-edge technologies and those adhering to conservative investment principles underscores the interest surrounding this US stock.
As we delve into the details of Tesla stock’s 2023 performance, this article aims to furnish stock market participants and traders with a comprehensive analysis.
Beyond the fervor surrounding Tesla, we will dissect the key factors shaping its stock trajectory, shedding light on financial metrics, industry trends, and macroeconomic influences
Whether you’re a Tesla supporter, a cautious observer, or a pragmatic trader, join us in unraveling the multifaceted story of Tesla stock in the year gone by, navigating the challenges and triumphs that have defined its market journey.
Tesla’s Graph this Year
In 2023, Tesla stock has been a standout performer, boasting a remarkable 100% return compared to the S&P 500’s 25%.
Analyzing its trajectory using Elliott Wave Theory and Fibonacci Channel, a compelling impulsive wave pattern emerges. The application of Fibonacci retracement hints at a potential surge, with a projected target of $317, a significant leap from its current $250 mark.
For traders eyeing the mid-term, the 52-week and 156-week exponential moving averages (EMAs) act as reliable guides amid the ongoing bullish momentum.
Caution is advised, with $208 emerging as a crucial support level, aligning with the 156-week EMA. A breach of $242 could trigger a rapid upward move, fueled by the Santa Claus Rally, while $475 stands as a formidable resistance in the sights for 2024.
Looking further ahead, the Fibonacci channel suggests a long-term target of $675, the ultimate resistance in the current trend.
Any downward movements in the channel present strategic opportunities to accumulate positions, especially with supportive market conditions signaled by the Fed’s decision not to hike rates and potential cuts in 2024.
As traders navigate this bullish landscape, vigilance around critical levels and a strategic eye on Fibonacci projections become key to optimizing positions and capitalizing on the stock’s dynamic performance.
Q3 Results
As we delve into Tesla stock’s 2023 performance, a critical examination of the recent quarter is necessary, revealing the challenges and shifts in its earnings release:
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Q3 Disappointment
Tesla’s third-quarter results were below expectations, with reported EPS at $0.66 compared to the expected $0.73.
The disappointing performance highlighted negative trends in growth and margins, impacting Tesla’s valuation and raising concerns about future prospects.
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Revenue Growth Slowdown
Tesla, known for its robust revenue growth, averaging 40-50% annually, faced a slowdown. Q3 2023 revenue growth of 9% YoY fell below the industry average, diminishing a key factor contributing to Tesla’s premium valuation.
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Margins Under Pressure
Tesla’s historical dominance in margins, boasting a 25% gross and 15% operating margin, is diminishing. Q3 saw the operating margin drop to 7.6%, aligning with the industry average and eroding another aspect of Tesla’s premium appeal.
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Car Sales Dependency
Despite assertions that Tesla is more than a car company, 90% of its revenue still comes from car sales. While Full Self-Driving (FSD) is seen as a potential profit booster, questions arise about whether it will genuinely enhance earnings or merely replace them.
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Future Profitability Challenges
The recent launch of the Cybertruck and its production ramp-up, requiring substantial time and capital, poses challenges to Tesla’s margins in the short term.
Elon Musk’s acknowledgment of a prolonged path to profitability with the Cybertruck raises questions about Tesla’s current competitive edge in the auto industry.
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Uncertain Premium Worth
With the disappearance of higher revenue growth and margins in Q3, the article questions the premium that Tesla currently commands.
As Tesla transitions toward diverse business lines, its reliance on car sales prompts skepticism about the magnitude of its premium in the market.
Future Outlook
Having looked back at the past year performance, for Tesla stock, we can now look ahead to the future. Tesla’s future outlook presents a mixed bag of challenges and opportunities.
Despite aiming for 1.8 million vehicle production in 2023, sustaining a 50% CAGR raises skepticism amid decelerating growth.
Q4 needs to deliver 449K vehicles to meet targets, but a potential 2% YoY decrease in Automotive Revenue looms, exacerbated by a high-interest rate environment that could flatten Total Revenue or even turn negative.
The spotlight on the Cybertruck reveals five major concerns. Elon Musk’s projection of a 0.25 million annual output by 2025 implies a prolonged wait for reservation holders, casting doubt on the accuracy of demand estimates.
The base model’s price hike from $40K to $61K challenges initial expectations, possibly triggering deposit refunds and weakening demand. With a mid-tier price tag comparable to Tesla’s luxury line and other electric trucks, a production rate of 250K units seems overly ambitious.
Musk’s worries about the impact of high interest rates on car affordability add another layer of uncertainty, potentially dampening Cybertruck sales in the coming years.
While the near-term outlook appears gloomy, Tesla’s commitment to projects like Dojo, Optimus, FSD, and upcoming vehicle launches suggests a promising long-term trajectory, reinforcing its position as a dominant force in renewable energy solutions.
As Tesla weathers the macroeconomic storm, its resilience may distinguish it from weaker counterparts when the storm subsides.
