Recent struggles have plagued Tesla (NASDAQ: TSLA). Its stock has fallen 30% while other "Magnificent Seven" stocks have had a great year. Comparisons to Microsoft's 13% growth and Nvidia's 80% rise in 2024 show something is wrong for the EV pioneer.
Stormy waters Why is Tesla struggling? The automaker faces a cooling local market and tougher Pacific competition. EV sales are up over last year at home, although growth is slower than expected. Automakers have cut costs across the board to stimulate sales, with the average EV sticker price down 10.8%.
Tesla suffers more elsewhere. Sales in China, its second-largest market after the U.S., have dropped dramatically. BYD and other Chinese manufacturers are outproducing Tesla by producing more EVs at lower prices.
Big miss Tesla's first-quarter vehicle production and deliveries numbers proved its struggles. Disappointed investors are an understatement. Wedbush analyst Dan Ives called it "an unmitigated disaster." Ouch.
Wall Street analysts had decreased their consensus prediction for Q1 vehicle deliveries by 14%, from 494,000 to 425,000, but Tesla underperformed even those lower expectations. Only 387,000 automobiles were delivered throughout the quarter. Tesla recorded its first year-over-year decline since 2020, delivering 423,000 vehicles less than in the previous quarter. When the news emerged, the stock fell about 5%.
Could Tesla stock reach $2,000? With all the Tesla negative, the stock is down roughly 60% from its 2021 high and trading about $170. This could be a good buy. Ark Invest head Cathie Wood agrees. After the deliveries data was disclosed, the prominent investor told CNBC that "is not the time to run for the hills."
Wood thinks Tesla is more than an EV maker. A robotaxi company, she says. Wood believes the technology would "deliver $8 to $10 trillion in revenue by 2030 and is one of the most important investment opportunities of our lifetimes." Wood has a $2,000 Tesla share price target because of its huge income potential.
Tesla would gain a lot of value if it can produce self-driving taxis, but it's a big if. In addition to technical development challenges, the corporation faces severe competition. Alphabet-backed Waymo appears to be making progress toward driverless vehicles. The business just completed highway testing of its driverless automobiles. Tesla needs to catch up.
Should I buy Tesla stock? The stock's price-to-earnings ratio is back within tech norms at 40, so investors may have overreacted. That's still high, but it's closer to the Magnificent Seven than Nvidia's 72.
Tesla may have some challenges, but with some of the world's top people, it can reduce its production costs and compete better at home and in China. This and the value it would create if it captures even a fraction of a future robotaxi market make it a buy.
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