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Tesla: Still Stock Price Risk

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TSLA’s report tonight saw slow revenues and margins. The company expects continued slower revenues. My EPS are way below the Street which guide’s my opinion as you know on any stock I’ve followed. My TSLA earnings have been an amazing predictor of the stock’s direction over the last 5-7 years following it.

As long as bonds don’t catch a bid, rates go up and car buyers wait.

TSLA, without a higher gross margin driver like FSD has now become a large legacy low margin cyclical auto company. Slowing revenues and slowing margins is not the sign of a growth company but rather a mature cyclical company. Dropping price is a reaction to demand because TSLA doesn’t want to slow production. I mentioned in chat it’s kind of like a trader that keeps buying as a stock goes down. Those traders risk getting wiped out. Most cyclical companies adjust production-growth capacity with changing cyclical dynamics. TSLA has not. It’s a building risk.

PS FSD is not getting amazing reviews (here and here) so that high margin driver likely continues to get pushed out.

So without an FSD high margin driver, TSLA’s at the mercy to auto cyclicality.

Remember also auto PE’s tend to be sub-10. Based on my numbers TSLA’s trading at over 100 PE on this year’s numbers.

The energy business revenue growth has also been slowing.

Lower short term Fed rates may not be the savior either. As short rates come down, a strong economy can drive up longer term rates hurting car buyers.

Technically, below TSLA’s 200 day is risk to 130.

I do think many TSLA bulls who’ve made a lot of money in the stock have not lived through typical cycles now that TSLA is no longer a auto growth company but rather

more of a mature auto company.

Caution is continued to be warranted.

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All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless. Opinions given are at this moment and can change rapidly after this is published. If our calls are made public (outside the service) we may or may not update our opinions publicly. 

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