Tesla just announced record sales. Is it all rosy ahead for Tesla's stock? Tesla just announced record sales. Is it all rosy ahead for Tesla's stock? Tesla just announced record sales. Is it all rosy ahead for Tesla's stock?

Tesla just announced record sales. Is it all rosy ahead for Tesla's stock?

Equities 4 minutes to read

Summary:  Tesla's stock is up +159% in 2023 and it just announced record sales this quarter. Is it all rosy ahead for Tesla's stock? We should look deeper into the numbers.


Source: CleanTechnica & Tesla

Tesla's stock popped up another +7% after announcing another record sales in Q2 2023 on Friday. 2 insights:

1️. Aggressive price cuts are a big catalyst behind the record sales figures, but it doesn't mean this will translate into higher profits.

In 2023 alone Tesla has cut its cars' prices by 6 times already. The purpose behind slashing prices is to retain dominance in an increasingly crowded Electric Vehicle (EV) market. But cutting prices ultimately comes with a cost. We will know the true picture on July 19th when Tesla announces it Q2 earnings results.

In the meantime 2 things also matters:
1) While Tesla has been cutting prices the key ingredient to manufacture their batteries called lithium carbonate has increased 34% over the past 3 months.
This will negatively impact their bottom line.
2) Tesla's unsold inventory is still a concern.
When we look deeper into the figures Tesla still produced 91,000 more cars than it sold in Q2.

Although this figure is shrinking versus prior quarters, the buildup in unsold cars equates to about US$4.2 billion in value (assume US$38K per car). So, there are reasons to not just blindly celebrate on Tesla's success.

2️
. How should Tesla's current valuation be read?

Tesla has its work cut out for it based on what the expectations based into the stock price. For example, with the expected revenue of US$99.9 billion in 2023, for Tesla that would translate into an aggressive +17.1% annualized revenue growth rate over the next 10 years. But no car manufacture has ever remotely reached these numbers.
Taking a comparison from another growth industry was in 2011, Apple hit US$108 billion in revenue and the subsequent 10-year revenue growth rate was 12.9% annualized. But this growth rate was obtained by Apple with lower priced consumer hardware and selling digital goods. Apple was operating in an industry with little meaningful competition at the time.

So this may not be a great comparison for Tesla but still highlights that the road ahead may be challenging for Tesla to meet these elevated expectations. Clearly Tesla has other trump cards up its sleeve like potentially becoming the standard for charging stations amongst US EVs.

Share this research with just a click of the sharing icon next to the article title, you can also post it directly to LinkedIn, Twitter, Facebook or even send it via email.
Join our community of traders and investors by sharing valuable insights.

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Disclaimer

The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Trading in financial instruments carries risk, and may not be suitable for you. Past performance is not indicative of future performance. Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.