2024-04-24 08:00:00 ET
Summary
- Tesla missed top and bottom line estimates for Q1 2024; however, TSLA stock is jumping up double digits in the after-hours session.
- Going into earnings, TSLA stock was oversold, and the announcement of a new, cheaper vehicle is likely boosting investor sentiment.
- The demand environment for Tesla is unlikely to improve in the near term, but Musk is apparently back at Tesla and driving changes to turn things around.
- From a long-term investor's perspective, the Q1 report counts for little. Tesla is a reasonably valued bet on autonomous driving, and I like the idea of accumulating more shares during this drawdown.
Introduction
After avoiding Tesla from April 2023 to January 2024, I upgraded Tesla, Inc. ( TSLA ) to a "Buy" in my previous report, looking beyond near-term risks and towards long-term reward:
Based on fundamentals and technicals, I view Tesla's near-term risk/reward as skewed to the downside. In my view, investors with a 1-2 year investment horizon should continue to avoid Tesla. On the other hand, I like the idea of restarting accumulation for investors willing to look beyond a couple of years due to Tesla's favorable long-term risk/reward. At my investing group, we like to operate with a 5+ year time horizon, which is why we will restart slow, staggered accumulation in TSLA stock at our next bi-weekly deployment. To be clear, we understand that Tesla could drop more than 50% from current levels in the event of a hard landing. The plan is to dollar-cost average for the next couple of years even if Tesla keeps spiraling lower during this low-growth period for the EV giant.
Key Takeaway: Due to a significant shift in long-term risk/reward, I now rate Tesla a modest "Buy" at ~$180 per share, with a strong preference for slow, staggered buying over the next 12-24 months.
Read the full article on Seeking Alpha
For further details see:
Tesla: Weak Q1 Report, But Cheaper Models Give Hope