Tesla’s growth outlook has collapsed recently, and analysts are now examining its downside potential.
TSLA – Daily Chart
TSLA has continued to stumble and may test $150, but failure could open up lower levels to $100.
Tesla has been among the top growth stocks for years, especially for retail investors, but 2024 hasn’t been a good year. On a YTD basis, it is the worst-performing S&P 500 Index stock.
Tesla is also the worst-performing stock among the “Magnificent 7” group. Many analysts are now questioning its growth story. Wells Fargo’s Colin Langan argues it is a “growth company with no growth.” Also, on Friday, the stock was weaker on more reports of lowered production at its plant in China.
In a Q4 2020 earnings call, Tesla CEO Elon Musk said a long-term delivery CAGR of 50% was possible. He added, “We do think that we can maintain a growth rate in excess of 50% per year for many years to come.”
The company’s deliveries rose by over 50% in 2021, but in 2022, their growth slowed to around 40%. Last year, Tesla’s deliveries rose by 38%, and Musk effectively withdrew the 50% CAGR guidance.
In 2024, Tesla warned that this year’s delivery growth “may be notably lower than the growth rate achieved in 2023.” Wells Fargo expects deliveries to be flat in 2024, with a fall expected next year.
Tesla’s problems are not limited to top-line growth. Gross margins were down 15% YoY due to the price war strategy, and earnings per share slumped 23% to $3.12.
Tesla prioritises volume growth over profits, which has led to a slowdown in its profit margins. The EV price war has affected other industry players, as most have had to cut prices to make their models competitive. However, the Chinese EV makers are proving intense competition for Tesla.
