Tesla (TSLA) rose 5.5% on October 3, 2023, bringing its one-month gain to approximately 18% as it surpassed its critical 50-day simple moving average (SMA), a technical indicator often viewed as a signal of shifting momentum.
Key catalysts for this positive performance include Tesla’s upcoming Cybercab event on October 5, where it will showcase its purpose-built robotaxi, and a significant 56% year-over-year increase in active paid Full Self-Driving (FSD) subscribers, totaling 1.48 million. Despite these encouraging signs, Tesla’s stock trades at nearly 169 times forward earnings, raising concerns about its valuation amid declining automotive gross margins (currently 16.3%) and significant increases in capital expenditures expected to exceed $25 billion by 2026.
As Tesla invests heavily in autonomy and AI, questions arise about its ability to maintain profitability while pursuing rapid growth. The Zacks Consensus Estimate for Tesla’s EPS has decreased over the past 60 days, suggesting that the current optimism reflected in the stock price may not be sustainable.
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