This week’s stock of the week is Tesla, Inc. (TSLA). We are going to take a good look at Tesla stock and the fundamentals and technicals. Note that we can only relay any data that we can publicly access. We are not professional or expert analysts, we encourage you to do further research if you want to invest in any stocks. If you have any more questions or suggestions about this article or if you have more information we could use, be sure to contact us through the contact page or mail us directly at firstname.lastname@example.org
What is Tesla Stock?
When you think about Tesla, you think about Elon Musk. But Elon didn’t actually found the Tesla company. The company was founded in 2003 by Martin Eberhard and Marc Tarpenning. Their goal was to create an electric sportscar based on the AC Propulsion T-zero, an american electric vehicle. A year later, Elon Musk decided to invest a large sum of money to develop the Tesla roadster. Tesla regularly collected money from investors, partners and the US government. Since 2010 Tesla went to NASDAQ. the IPO price was only $17. in 2012 the Tesla Model S was released, however in 2013 Tesla got into yet another crisis because they weren’t able to convert the pre-orders into actual sales. So they put together a sales-team and a fusion with Google Inc (GOOG) was being prepared. But, in may 2013 Tesla made profits for the first time and the Tesla Stock price rose from $30 to $130. The fusion with Google was cancelled. In 2016 the Tesla Model 3 went on sale. Tesla presented the car on the 31st of March and got a whopping amount of 232.000 pre-orders in a few days. To pre-oder a Tesla Model 3 you needed to put down a deposit of $1.000 (€1.000 in europe), BUT if you cancelled the pre-order you would get your deposit back. Tesla got alot more orders than they could handle which forced them to grow and produce quickly. Nearly 24% of the pre-orders got cancelled in 2018, almost double the rate of the year before that. Other than cars Tesla also makes/sells alot of merchandising and other kinds of goodies and a Home PowerWall, amongst other things.
Is Tesla, Inc. a marketing genius?
You can ask nearly anyone about Tesla, and they will have heard about this company, at the very least they will know the cars. Tesla has come to the point where they have a cult-like following (kind of similar to apple), there are even some groups on Facebook and reddit that see Elon Musk as some sort of a god. Wether this is a good or bad thing, i’ll leave that up to you. But you certainly can’t deny that Tesla and Musk have a very powerful marketing presence. There are also rumours and suspicions that the breaking of the bulletproof windows on the cybertruck was all just a PR stunt. And if you think about it, it has definitely worked. Nearly every news outlet reported the “failing” of the bulletproof window and as such, everybody suddenly knew about Tesla’s Cybertruck. The fact that Elon Musk himself has such a big cult-like following helps the company aswell. Especially his twitter account. Elon Musk can be seen regularly tweeting memes and responding to people. Often times his tweets are not even related to Tesla in any way. But still it helps the marketing for both himself and Tesla.
Bloated pre-orders and competition?
As mentioned above, the Tesla Model 3 saw nearly 24% of pre-orders cancelled in 2018. Several reasons are mentioned for the cancellations such as the long waiting times to get your model 3, the expiration of the tax credit and perhaps also that people placed a pre-order just to show off without ever having the intention to actually buy the car. The same might be happening right now with the cybertruck. On the 27th of November Elon tweeted that he already had 250k pre-orders for the Cybertruck. However this number can be subject to alot of cancellations just like the Model 3 had. You have to understand that these pre-orders are not any form of a commitment. Anyone can pre-order the cybertruck and if you cancel, you will get your deposit back. And the deposit for the cybertruck is only $100 instead of $1.000 for the model 3. So you have to keep in mind that many of these pre-orders might never get filled.
Competition, in the beginning of the Model S’ lifespan, there wasn’t much of it. But in the last few years, major car brands have been releasing new electric vehicles to rival Tesla. Luxury brands such as mercedes and Audi, but also the more economical brands such as Volkswagen, Kia and Hyundai have been developing and producing electric vehicles aswell. The competition for Tesla is getting more and more involved in the world of electric vehicles. The major advantage Tesla has; great battery and electric motor technology. The disadvantage for Tesla and thus advantage for brands such as mercedes and Audi is that Tesla’s build quality is not that good. The most common problems; Bad paint, dents, scratches and panel gaps. The interior is not always the best quality either. Several car reviewers compared the Porsche Taycan with the Model S and their first remarks are usually that the Taycan has a much better quality interior, it feels and looks better made than Tesla’s. However, Tesla is a starting car company, no-one does everything perfect the first time. Tesla can develop and improve their designs and quality to rival that of their competitors.
Should Tesla worry about it’s competitors? yes and no. They should definitely worry about their competitors developing their battery and motor technology to rival or even trump that of Tesla. But Tesla has such a strong following at the moment, and owning a Tesla is more of a status symbol than anything else. So for the time being, I think they don’t need to worry much aslong as they keep their marketing as good as they have it now.
Fundamentals, Technicals and Price Targets
The IBD Stock Checkup Tool shows that Tesla has an IBD Composite Rating of 79 out of a best-possible 99. The rating means Tesla stock currently outperforms 79% of all stocks in terms of the most important fundamental and technical stock-picking criteria. It has a Relative Strength Rating of 97 out of 99. The rating tracks market leadership by showing how a stock’s price movement over the past 52 weeks measures up against that of the other stocks. It has a weak EPS Rating of 25, which compares quarterly and annual earnings-per-share growth with all other stocks. The company currently holds the No. 4 ranking among its peers in IBD’s Auto Manufacturing industry group. Ferrari (RACE) is No. 1 in the group, followed by Toyota Motor (TM), then Fiat Chrysler (FCAU).
If you look at the Technicals, at the time of writing, all timestamps show a buy to strong buy rating. You can check this widget or any techncial analysis site to see the current technical rating for Tesla Stock.
At the time of writing, Tesla Stock holds a recommendation between Hold and Buy, leaning more to the Hold side. The average price target is 292.66 with a high and low of respectively 733.9 and 44.52. As you can see the price targets are quite varied.
The verdict on Tesla Stock
Tesla is a difficult stock to gauge for me at the moment. It does currently mostly rely on their sly marketing programs. The new products such as the House powering, Powerwall systems are interesting and should not be forgotten about! However Tesla has had some issues as mentioned, but they’re also growing like crazy opening a bunch of new factories. IF all goes well, i think Tesla Stock is a Buy for me. But there are many bumps on the road to an even higher share price. I would encourage you to look further into the future plans of Tesla and their current business plan. And take a good look at their competitors as they could potentially take a big slice of Tesla’s electrically powered cake.