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No elaborate tesla stock analysis is required to discern its current status as the worst-performing stock among the Magnificent Seven as of 2024. Facing a distinct set of challenges from its competitor Rivian, the EV giant, Tesla, finds itself in the midst of an industry-wide electric vehicle slump.
Nevertheless, Tesla boasts unique advantages over its automotive counterparts. While its near future may be tumultuous for investors, what insights does a thorough TSLA stock analysis offer regarding its trajectory a decade from now?
Electric Vehicle Demand and TSLA Stock Performance
The surge in interest rates is rendering new car purchases unattainable for many consumers. Rivian, for instance, manufactured over 17,500 vehicles in the last quarter, a modest 8% increase from the previous quarter. However, deliveries plummeted by 10%, with under 14,000 cars reaching customers compared to the previous quarter.
Luxury EV peer, Lucid Motors, is also grappling with challenges, projecting a mere 9,000 vehicle production for 2024—falling short of the anticipated 22,600 EVs.
The growth of EV sales across the industry is decelerating at a pace beyond initial predictions. Ford halved its production of the F-150 Lightning, while GM is reducing its EV production schedule significantly.
Although Tesla hasn’t disclosed exact production figures for the upcoming year, it did hint that the vehicle volume growth rate might notably lag behind that of 2023.
A Major Player in a Niche Market
An impending shakeout looms over an electric vehicle sector smaller than anticipated by analysts. Early adopters have made their purchases, but the general consumer sentiment toward EVs remains tepid. A noticeable shift is evident, with Toyota witnessing remarkable growth in its hybrid vehicle lineup, highlighting consumer apprehension toward pure-battery EVs.
While Tesla may not be the sole survivor in this evolving market, it undoubtedly stands tall among its peers. It played a pivotal role in popularizing EVs during their infancy, transforming them from quirky alternatives to mainstream vehicles. In 2023, Tesla raked in $82 billion in EV sales, signifying a 15% surge over the previous year. Despite a 35% dip in operating profits, the company produced almost 1.85 million EVs, delivering 1.8 million units.
With a dominating 55% share of the EV market amidst mounting competition, Tesla’s foothold extends to over 4% of the entire automobile market—outpacing renowned automakers like Mercedes-Benz, BMW, Subaru, and Volkswagen.
Yet, trading at 45 times trailing earnings and six times sales, TSLA stock remains conspicuously overpriced. The road ahead for Tesla in the next decade will likely be rougher than the previous ten years. While Tesla’s fate may not mirror Rivian’s or Lucid’s, surpassing market expectations seems improbable. Substantial downward adjustments in share prices are indispensable to render TSLA stock an appealing investment.
Rich Duprey has been illuminating the intricacies of stocks and investing for two decades. His work has been featured on reputable financial platforms like Nasdaq.com, The Motley Fool, and Yahoo! Finance, garnering attention from national and international publications.
