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There is never a dull moment when it comes to Tesla stock and the company’s Chief Executive, Elon Musk.
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One day, he’s launching mini satellites into orbit to expand his space-based global internet service. Another, he’s opening a new auto manufacturing plant or announcing a new version of a Tesla electric vehicle.
Or, on another day, he’s overhauling Twitter (TWTR) and jousting with critics over the social media company he bought for $44 billion. With all that, and with competition growing, is Tesla stock a buy?
Tesla reported delivering 343,830 cars in the third quarter, up 42% from the year-ago period. That was above the record first quarter of 310,048 deliveries, but below estimates of about 360,000.
Tesla produces four electric vehicles: the luxury Model S sedan and Model X SUV as well as the Model 3 sedan and Model Y crossover. Tesla makes the vehicles in California, China, and in Berlin, Germany, as well as Austin, Texas.
The Long-Awaited Semi Hauler Unveiled
In early December, Tesla unveiled its long awaited Semi, an 18-wheel, long-haul electric freight truck, five years after it was first announced. Musk also has signaled there are plans to build out a charging network for long-haul trucks.
Musk did not specify how much the 18-wheeler costs. The Semi is capable of traveling an estimated 500 miles per charge, accelerating from zero to 60 miles an hour in 20 seconds. Tesla expects to ramp production over the next year and aims to deliver 50,000 units in 2024.
The first Tesla Semi trucks are going to PepsiCo (PEP) in California. Pepsi placed its order for 100 EVs when the Semi was first announced in 2017.
“We are bullish on demand for the Semi as TSLA moves forward with ramping production of the truck to 50K units in 2024, seeing considerable appetite from large corporations seeking to reduce their carbon footprints,” CFRA analyst Garrett Nelson said in a recent note to clients.
Shipping out the first new Semis would mark a win, in a year when tesla stock is down sharply. But despite Tesla stock setbacks in 2022, the company remains the king of the global EV market.
Concerns About The Health Of Tesla Stock
For now, however, the overriding concern about the health of Tesla stock is focused on its production in China and Chinese demand for its vehicles.
Tesla sold a record number of China-made vehicles in November, according to data released by the company. It sold 100,291 China-made electric vehicles in November. That’s a 90% increase compared with last year and a 40% gain compared with the 71,704 Tesla vehicles sold in October.
However, multiple reports have said Tesla plans to cut its production in China. On Dec. 9, Reuters reported that Tesla will suspend Model Y production at its Shanghai plant in the final week of December. Tesla has refuted those reports, saying the claims that it was cutting its Shanghai plant by up to 20% were “untrue.”
The outlook for demand in China has become less clear, even with a late October price cut and other incentives. Tesla also exports a large number of China-made vehicles produced at its Shanghai factory.
Is Musk Biting Off More Than He Can Chew?
It can be argued that no CEO has taken on more responsibility than Elon Musk. In addition to running Tesla, Musk is also founder and chief executive of SpaceX, which has a stated mission of colonizing Mars. SpaceX also owns and operates the Starlink satellite internet network. Musk is also founder and CEO of tunnel maker The Boring Co. Further, Musk runs Neuralink, which seeks to tie human brains to computers.
With all that going on, Musk watchers say he may have overextended himself with his purchase of Twitter.
Musk has spent a large amount of his time focused on Twitter, raising concerns among analysts. In addition to laying off more than half its staff, Musk is dismantling content moderation on the social media site, which has caused a growing number of consumers to turn sour on Tesla brand. This has taken a bite out of Tesla stock.
Morgan Stanley analyst Adam Jonas weighed in on the matter in a note to clients. He said Musk’s spiteful comments have inflated a negative sentiment about Tesla and could drive some degree of damage to the electric-vehicle maker’s fundamentals.
“Our investor survey reinforces our views that Elon Musk’s recent involvement with Twitter has contributed to negative sentiment momentum in Tesla shares and could drive some degree of adverse downside skew to Tesla fundamentals,” Jonas said in a note to clients. Still, he maintained his buy rating on Tesla stock.
Checkup On Tesla Stock
According to the IBD Stock Checkup tool, Tesla has a weak IBD Composite Rating of 45 out of 99. When choosing growth stocks for the biggest potential gains, based on the CAN SLIM investment paradigm, focus on those with a Composite Rating of 90 or higher.
The stock also has a paltry Relative Strength Rating of 13 out of 99.
In the stock market, timing is critical. So when you’re looking for stocks to buy or sell, it’s important to do the fundamental and technical analysis that identifies lower-risk entry points that also offer solid potential rewards.
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