Tesla is down over 5% and closed slightly below $260.
Obviously a reasonable drop compared to how the stock has been performing as of lately,
with the market trying to judge where Tesla's stock price should actually be during these
times.
It is conflicted with so many tech stocks around their 52 week highs, and Nvidia sitting
around its all time high, and trying to work out whether Tesla should also have a similar
recovery.
With more and more evidence of Tesla leading the way so far ahead when it comes to EVs
and FSD, and if EVs are to become the future, then its Tesla's world, and everyone else
will be paying rent.
The stock was actually up about 1.5% pre market too, getting very close to $280.
Of course the stock got hit today with more Jerome Powell letting us know that inflation
still needs to come down to the FEDs target, as price stability is the main mandate of
the FED, and too much inflation disrupts a stable economy.
So we may need to expect more rate increases to come.
However, the FED is going to assess the economic activity first to see how necessary it might
be.
This may just be a scare tactic to cool down the markets, as we also don't know just how
much power the FED actually have, before rates become too high, and not even the government
can afford their payments on their national debt, without having to borrow more money,
rinse and repeat.
Now with Tesla selling products that are in the auto industry, higher rates mean higher
prices for vehicles, and thus lower demand, which would mean lower prices, lower margins,
etc.
So the stock got hit, and was actually down at around 259 briefly too.
However, there seems to be some resistance there, I think there is still a lot of FOMO
on Tesla, and seeing any dip right now, creates buyers, as it is now back around 264.
Which means it's still maintaining some of its gains from yesterday too.
We also have Dan Levy from Barclays cutting his price target from 260 to 220.
He admits that is because he is focused more on the existing car business, compared to
the AI opportunity for Tesla.
Again the whole conjecture of whether Tesla is an AI company or car company.
He thinks investors are disregarding fundamentals.
Then the fact that Tesla are building a new factory in Mexico, and now rumors of another
new factory in India potentially, if not somewhere else, shows that there is a lot of growth
still to come just in the next few years for the auto side of the business.
With Elon suggesting 5 million sales a year of the two new gen 3 models.
Then energy growing too, so it can be argued that the fundamentals are on the way for the
auto business.
Well this is a tough time for the auto industry with rates this high, the FED are attempting
to correct inflation, so that inevitably rates will reduce, and the auto market will return
to normality, it may however be another year or so until that occurs, or even longer.
And when it does Tesla may be able to raise prices again somewhat, and the margins will
improve again.
Meanwhile Tesla's production is also increasing, whilst OPEX remains fairly stable, so operating
margins should increase to levels we saw before, except with much higher turnover.
Anyway, this investing, and this is investing in Tesla.
It is going to move from event to event, if this is all the macros can affect Tesla right
now, with news of potential rate hikes, then it's still holding relatively well.
There is so much anticipation of positive Tesla events on the way, that Tesla's stock
price could continue to run anyway.
Just look at the chart from the last month, up 40%.
The FED and macros being the biggest concern more most investors that could stop this run.
Even if the run stops though, it feels like the stock price can hold for now.
Investors believe in Tesla again, having seen how much further ahead Tesla is than the competition,
and then realizing that if they don't join Tesla, they will be left for dust.
Kind of like a buggy company having to team up with a company that makes internal combustion
engines, realizing that horses are not the future of transport.
Although Jim Farley from Ford is saying that the Cybertruck is just some high end product
targeted at Silicon Valley rather than a truck for real working people.
Saying that Ford make trucks for real people who do real work.
To be honest, it looks like a lot of thought did go into the Ford F-150 Lightning.
They know their market, and cater to it.
Whereas Tesla is just creating a whole new market.
Ironically the phrase from Henry Ford seems apt, that if he asked his customers what they
wanted, they would have said a faster horse.
Look at the waiting list for the Cybertruck, look at how much interest and exposure any
spy photo generates.
Listen to how much people love talking about the truck, the ideas and potential that it
may have.
The applications, the specifications.
Make no mistake, this is one highly coveted product.
It feels like demand is strong.
And this is for the US pick up truck market, which is huge, and there is nothing close
to it.
However, I would guess that there is a possibility that the majority of reservation holders have
never had a pick up truck before.
That is just a guess, but all the people I know who have ordered one never have.
This vehicle is attracting new consumers to this market segment, because its far more
than a pick up truck, its a Cybertruck.
And we have seen how the Model 3 and Y have beaten out all the competition in their segments,
so is there a possibility the Cybertruck might do the same, especially given its popularity
already, without even being in production yet?
Could it beat the F-150 pick up truck and reach a million a year?
I don't know, perhaps that seems unlikely, but the point is there, is plenty of demand
for a pick up truck, and all the current ones in the market, look just about identical,
and all do the same things, aside from the F-150 Lightning and Rivian.
But the Cybertruck takes it to the next level again.
I expect this product to give more momentum to the stock price when it finally commences
delivery.
Add to that more confidence from the market, that AI is going to be life changing, and
will replace a lot of jobs.
One clear job Tesla's AI will replace is obviously drivers.
And that is where the Robotaxi potential lies.
But just the sheer convenience of having a car drive itself, is also a huge opportunity.
AI is only going to improve, and by association so will belief in Tesla's AI capabilities.
Elon now talking about a huge FSD update that will be 11.420 of course.
Now whether this is a bluff from the FED, or something they are going to follow through
with we have yet to find out, and will likely depend on how they see inflation over the
next few months perhaps.
There is a lagging effect from the economic impact of what they have already done, and
Elon says that he is seeing deflation.
I dont think the market has even finished its bull run from 2021, with all the global
government spending, the central banks may have put the brakes on, but unless there is
a financial crisis to rearrange the system and money, then the market is ready to see
the rest of this bull run still.
There is still plenty of exuberance remaining.
When it comes down to it all, it’s a lot to do with sentiment right now.
The sentiment for tesla was feeling good, old memories were flooding back of how truly
world changing this company will be along with the determined ceo who will do whatever
it takes.
We just got a quick reminder that there are other factors in the market other than just
a company looking to thrive and change the future.
The market might just look past this latest threat from the FED and keep going.
Of course if the market calls the FED's bluff, then it will be more likely the FED might
actually see it through.
I guess we will have to wait and see.