TSLA Stock key Metrics
Tesla’s (NASDAQ.TSLA:) rapid rise has been incredible. It is hard for us to believe that, ten years back, 2012 revenues had not even reached $1 billion.
Revenues have skyrocketed and 2021 saw 71% growth over 2020. Q1 2022 saw 81% growth in total sales, which was even more impressive.
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As the company expands, margins increase which is a fantastic sign of what’s to come. Tesla isn’t losing profits for growth, and this increase in margins shows that it doesn’t have to.
The company also plans to increase vehicle production and delivery.
Supply chain problems are bothering the company, particularly at Shanghai’s plant. China lockdowns have not helped. These issues can be found on Seeking Alpha and elsewhere.
While the news may appear to be positive on the surface, this stock cannot be evaluated in isolation. The stock is sinking and investors may want to look at a few things before they buy the stock.
Tesla stock may be hurt by distractions such as Twitter
This is a massive story about Elon Musk’s bid to buy Twitter (TWTR). I have written in detail about this issue recently. The deal has been made into a seemingly daily tittfor-tat. This is a shameful behavior by businesspeople, but it’s perfectly in line with the Twitter dynamic. It’s entertaining, but not very interesting. It’s tiresome. It is probably not good for Tesla stock.
This may not be a trivial issue. Many have wondered if Musk’s wandering eyes are a distraction that will impact Tesla’s leadership. It would be a wonderful time for Musk to drive Tesla to the top. Remember, there is competition.
Musk seems to have heard these concerns. He recently tweeted that Tesla was on his mind 24 hours a day. This statement is troubling. Even if it’s true, the unfocused appearance of a company leader can be very damaging. Nobody needs to wonder if Tim Cook (AAPL) or Satya Narella (MSFT) are fully engaged.
There are still other rumblings. Tesla was dropped from the S&P 500 ESG Index. This isn’t a major deal. Even if this news was not reported, it would be noticed by a very small number of investors. Musk, on cue, felt the need to make this news front-page with ((you guess it)) a Tweet!
It is not a confidence-boosting call from a billionaire investor and one Tesla’s largest individual shareholders, asking for an “immediate” announcement about a stock buyback program.
On Friday, news broke that a female flight attendant had been paid by the airline to settle a sexual misconduct case. Musk immediately responded to the accusation with a provocative Twitter tweet. Because the facts cannot be disputed, I won’t repeat it. It’s another distraction.
These factors may not be significant individually but they do have an impact on Tesla’s performance. However, Tesla’s stock market is terrified of uncertainty and seems to be experiencing a lot drama. Sometimes we say that there is too much noise about this team in sports. Also, while the team may be skilled, distraction and underperformance can be caused by off-field drama.
Will inflation outweigh the increased demand for higher gas prices?
Wait. These aren’t two different things? Rising gas prices can contribute significantly to increased consumer costs. While high gas prices could encourage people to use electric vehicles, rising economic costs, including gas, could impact consumers’ ability and finances to buy new cars. It’s like a teeter totter between the increased demand for electric vehicles due to higher gas prices and lower consumer spending due in inflation. The chart below shows that inflation tends to be heavier.
Many people will continue to drive their cars longer than necessary. These vehicles may be eligible for super-low interest payments or paid off. As shown below consumer confidence, an indicator of consumer spending, has dropped.
Can Tesla’s competitive advantage get eroded?
The auto sector has been behind the curve in electric vehicles for years. Tesla has been making great strides in a sector that was steadfastly sticking with its legacy products and only limited spending on electric vehicle R&D for years.
Tesla is increasingly being challenged by fully-electric vehicles from multiple manufacturers. Ford (F), will invest $22 Billion over the next few year to electrify its significant fleet. Bloomberg reports that Mercedes-Benz (OTCPK, DDAIF), Volkswagen and Ford have each set the goal of electrifying at least 40% in their U.S. sales by 2010.
General Motors’ (GM) ambition is to have an electric fleet by 2035. This list could go on. End of the days when Tesla was the only all-electric player in town.
The market for electric cars and trucks will grow as more people buy them. Tesla isn’t going under the hammer because of competition. Not even close. However, its incredible performance will continue if it is focused on and determined.
Bottom Line
Tesla will hold its shareholder meetings in August. Here, the company plans for another stock split. The stock rose sharply the last time that Tesla announced a stock division. It then fell back to Earth within days.