Shulou(Shulou.com)11/24 Report--

After a dark 2022, Tesla's share price took a beating at the beginning of the new year.

Market capitalization shrank by a Twitter on the first trading day of 2023, Tesla closed down 12%, and his market value fell by $47 billion a day, more than the $44 billion Musk bought Twitter. Now Tesla's price-to-earnings ratio is only 20 times, which is the lowest point after the listing of the stock.

Although Musk remains optimistic on Twitter, "long-term fundamentals are very strong, but short-term market madness is unpredictable." But the reality is undoubtedly cruel. Tesla, the leader of electric cars, whose share prices skyrocketed in the past two years, has obviously gradually returned to the ground.

Tesla's share price has plummeted 70% in the past year and now has a market capitalization of only $400 billion (as of Wednesday's close in the United States), a far cry from its peak of $1.2 trillion. Meanwhile, the Nasdaq composite index fell 33% in 2022, while the s & p 500 fell only 18%.

Tesla quarterly delivery data did not meet the expected negative factors this time is the delivery data released by Tesla on Monday. Tesla delivered 405000 vehicles in the fourth quarter of last year, below analysts' expectations of 420000. Tesla's total delivery for the whole of last year was 1.3 million, up 40 per cent from a year earlier, falling short of the 50 per cent growth target previously set and below analysts' downgraded expectations. At the end of October last year, Tesla hinted that he might not be able to meet his target of 50 per cent year-on-year growth in annual delivery, and analysts have downgraded Tesla's delivery forecasts.

Wedbush analyst Daniel Ives (Elvis) believes that taking into account the economic environment is not optimistic, Tesla fourth-quarter delivery volume is reasonable, "We think this is a pretty good performance." But the market clearly does not think so. "investors sold heavily because the delivery data were lower than expected, and Tesla will be unlucky to open the door in 2023," Elvis wrote. "

Delivery fell short of market expectations. Tesla's total output in the fourth quarter was 440000 vehicles, 34000 more than the delivery volume. This shows that the lower-than-expected delivery last year is not the problem of weak production capacity in the past few years. Moreover, Tesla, like other car companies, has obvious inventory problems.

Tesla is also faced with inventory problems. From the second quarter of last year, Tesla's inventory began to increase significantly, and by the end of last year it had exceeded 60,000 vehicles. This is a situation that has never happened before. In the past period of rapid growth, Tesla, without an intermediary seller, was always in short supply, and the inventory remained at a very low level of less than 20, 000 or even thousands of vehicles.

Tesla offered an unprecedented discount of US $7500 at the end of last year, cutting prices by 5000 Canadian dollars and 75000 Mexican pesos in Canada and Mexico, respectively. In the Chinese market, Tesla has also reduced prices and promoted sales.

In order to rush the payment, Musk also sent an email asking employees to voluntarily give up their leave and try to complete the delivery at the last minute. But even so, Tesla failed to meet his previous target of a 50 per cent increase in delivery.

Although Tesla's delivery growth of 40 per cent in 2022 has been much higher than the auto industry's standards, it is undeniable that Tesla's growth rate has slowed significantly and is lower than analysts' expectations. what kind of competitive advantage and growth momentum Tesla can maintain is what worries investors.

Assets shrank by $200 billion from 2019 to 2021, Tesla's share price soared like a rocket, with its market capitalization soaring from $45 billion to a peak of $1.2 trillion, as wave after wave of incentive options materialized. Musk's personal assets also soared from $20 billion in 2019 to $340 billion at the end of 2021, setting a global record for the personal assets of the super-rich.

But with Tesla's share price plummeting 70% over the past year, Musk's personal assets have shrunk by more than $200 billion from their peak at the end of 2021, also a record for the super-rich. The position of the richest man in the world is no longer Musk, but Bernard Arnault, chairman and CEO of luxury giant LVMH.

Arnold's personal assets are close to $170 billion, while Mr Musk is only $130 billion. Over the past year, while global stock markets have fallen sharply and the shares of tech giants have shrunk sharply, the shares of luxury giant LVMH have fallen by just 2.5%. The current market capitalization is as high as 389 billion US dollars, which is higher than that of Tesla.

Of course, Musk himself played an important role in the sharp fall in Tesla's share price in 2022. After his acquisition of Twitter, he focused on massive layoffs and business turnaround plans, had no time to pay attention to Tesla's daily operation, many controversial words and deeds were involved in political struggles, and even when Tesla's share price continued to fall, he continued to sell and cash out 39 billion dollars in a year, which made Tesla investors very dissatisfied.

But this time, investors are more worried about Tesla fundamentals, last year's delivery volume did not meet expectations, can Tesla continue the growth momentum in 2023? On January 25, Tesla will release its 2022 results, when investors will be able to have a clearer understanding of Tesla's operation and have a more accurate forecast of the performance outlook for 2023.

Wall Street downgraded expectations Goldman Sachs, Morgan Stanley and other brokerage analysts have cut Tesla's share price target. Wall Street's average stock price target for Tesla is now $233, about $60 lower than it was a few weeks ago. Analysts recommended buying for Tesla at 64 per cent, slightly higher than the average of 58 per cent of S & P 500s.

Just a few months ago, Wall Street analysts expected Tesla to earn $6 a share in 2023. But few analysts believe Tesla will be able to earn $5.43 a share by 2023.

Wedbush analyst Elvis believes that Tesla's U. S. stock earnings this year may be about $5, even if earnings per share of $5, Tesla's share price is only 21-22 times earnings. The price-to-earnings ratio is not high among technology companies. Elvis set a stock price target for Tesla at $175.

Morgan Stanley analysts lowered Tesla's earnings forecast and more analysts gave lower expectations. Morgan Stanley analyst Adam Jonas Jonas, who has been staunchly bullish over the past few years, now offers the most cautious expectations. He even expects Tesla's profit to decline in 2023, to $3.77 a share from $3.99 at the end of last year.

One factor that cannot be ignored is that the prospect of an economic slowdown has led to a slowdown in consumer demand. Musk also accused the central bank of raising interest rates last month for affecting consumer demand for cars. He has also stressed many times on different occasions that the US economy is about to fall into recession and that the decline is likely to be even more severe than in 2009. In the psychological expectation of the recession, consumers tighten their spending, and cars will have the biggest impact on consumer spending.

In such an expected environment, Wall Street analysts are also cautious about Tesla's delivery in 2023. Deutsche Bank cut Tesla's 2023 delivery forecast to 1.84 million vehicles, equivalent to a year-on-year increase of 40 per cent. Goldman Sachs even lowered its number to 1.8 million.

Facing many disadvantages, independent analyst Matthias Schmidt believes that 2023 will undoubtedly be a year to test the true level, and electric car companies will have to rely more on their own strength, and Tesla will feel this. Tesla shareholders may usher in more indicators of disappointment this year.

According to Mr Schmidt, Tesla will face several headwinds this year: interest rates have soared as a result of interest rate hikes by central banks around the world, which means a sharp rise in interest rates on car loans, which will dampen consumers' willingness to buy new cars; countries such as the UK, Germany and Sweden are starting to cut subsidies for electric cars.

Of the $7500 tax rebate subsidy granted by the US federal government this year, the tax rebate threshold for cars is only $55000, while that for pickups and SUV is $80,000. Middle and high-end models that exceed the price will not enjoy the tax rebate treatment. This means that Tesla's high-end Model S and X are too expensive to enjoy discounts, while only a few low-end Model Y and Model 3 models can get a tax rebate. This is a very unfavorable market competition factor for Tesla.

More importantly, major car companies have entered the electric car industry, consumers have more choices, now Ford, General Motors, Volkswagen have launched their own electric models. In Europe, Tesla's market share has fallen to about 15 per cent from 33 per cent in 2019.

Wall Street is particularly worried about Tesla's growth prospects in the Chinese market, where competition in the electric car market is so fierce that BYD has surpassed Tesla's sales due to the strong rise of local brands.

Wedbush analyst Elvis wrote in the investment report, "the Chinese market accounts for more than 40% of Tesla's global growth, which is a major concern. Tesla may further cut prices and promote sales in the coming months to boost Tesla's market demand in China.

Musk is the key factor, but Musk and Tesla still have many staunch supporters. Seth Goldstein, an analyst at MorningStar, believes that Tesla can still maintain its growth trend, and their annual delivery will reach 5 million vehicles by 2030.

Although Tesla's share price has plummeted 55% in the past three months, Ark Innovation Fund has been buying bargains. Due to the sharp fall in Tesla's share price, the investment value of Ark investment has also shrunk by more than 60%, lagging behind the performance of all similar funds.

Just after Tesla plunged 12% on Tuesday, Kathy Wood (Cathie Wood), the "wooden sister" of Ark investment, is still firmly bullish on Tesla. She said that there is still a lot of room for Tesla's share price to rise, and she believes that the stock price can soar all the way from the current $100 to $1500 in the next five years.

Wood said Tesla still has a clear advantage over competitors in other industries in manufacturing, technology, batteries and materials, and believes that the price of Model 3 can be reduced from the current $45000 to $25000 in the next few years. She believes that there are indeed many people who resist buying Tesla because of Musk's acquisition of Twitter, but as long as Tesla achieves a cost advantage, then the price factor will attract more car buyers.

Another factor that Wood is bullish on Tesla is her belief that Tesla will launch a completely driverless taxi fleet in 2024, taking the lead in this new industry. "the profit margin of the self-driving taxi industry is even as high as 80%, far more than the current car-building profit margin of 25% and 30%, thus raising Tesla's profit margin to more than 60%."

However, the most likely positive factor for Tesla in 2023 may be Musk's return.

Wedbush analyst Elvis wrote in the research newspaper that Musk and Tesla must do three things now. " First, set achievable 2023 performance targets, delivery targets and stable interest rates; second, stop cashing out stocks and make clear commitments in the next earnings call; and third, identify Twitter CEO candidates as soon as possible, so that Tesla can get rid of the risk of Musk's distraction and lack of concentration. Although Zhu Xiaotong will obviously take on more responsibilities at Tesla, Musk must do more business in person this year. "

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