Tesla is having a hard time on the stock market. The automaker founded by Elon Musk has just revealed contrasting quarterly accounts, marked by slightly better-than-expected profits, but sales below expectations and a disappointing gross margin. UBS says it is disappointed with the gross margin rate, although cash flow (free cash flow or operating cash flow after investments) is considered “solid”. In addition, the American electric car giant had recently disappointed with deliveries, which were also below expectations.
2022 has been “difficult for Tesla, between logistics issues in China, the hypothesis of a Twitter takeover by Elon Musk and supply chain issues,” notes Josh Gilbert, market analyst at eToro. Due to the logistical problems, the management sought to calm the request, which after all was considered energetic. But Tesla is expected at the end of the accounting for the fourth quarter. “As competition intensifies, it will be a trying quarter for Tesla, especially since its shareholders are not used to disappointment,” warns the expert.
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Tesla was weighed down by the strength of the dollar against other major currencies, by the increase in the cost of raw materials and the administrative delays associated with the inauguration of its new production sites in Germany and Texas. If the extra costs were partly passed on to selling prices, some analysts are worried about a future slowdown in demand, faced with the high costs of the group’s models and the rise in rates, which are pushing consumption. And Elon Musk fears a coming recession in China and Europe, while in the US he fears that the Fed will raise its key interest rate too sharply.
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Wolfe Research remains long on the stock, but lowers its price target from $360 to $288, purely from a fundamental standpoint. For 2023, Deutsche Bank estimates that Tesla could increase its gross margin by 3 percentage points due to the recovery of production sites that benefit from lower cost of goods sold. Between the launch of the Cybertruck and Semi and the expected increase in production volume, the next fiscal year promises to be “decisive” for Tesla, according to the German bank.
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Beware, Elon Musk’s ongoing takeover of Twitter could encourage the billionaire to sell more Tesla shares, which would put mechanical pressure on the stock market.
Momentum, a premium investment letter and Capital Exchange newsletter, had recently (see our October 14 Bullish Expectation) predicted a technical rebound in Tesla shares from their major support at $206.86-209.40. And our target (the 13-day exponential moving average) of $331 is almost reached. We will now watch for a possible retest of the major support currently at $204.16-209.40. See our full analysis of Tesla in Momentum.
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