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- Tesla: A nail in the Coffin for Ghosts of the Recent Rally
Tesla: A nail in the Coffin for Ghosts of the Recent Rally
I was 100% right when making a painful decision to sell all Tesla stocks from my portfolio. Even as I did it at a price around $215 and a little later than it would be perfectly wise to do, the further price movement was only disappointing for shareholders. A plunge below $200 in after-hours this Wednesday night as an immediate response to a very ordinary Q4 report by the global EV leader was like a nail in the temporary coffin for ghosts of the recent past in which Tesla rally got squirrelly. Now, Tesla officially suggested that the growth rate of its vehicle volume in 2024 "may be notably lower" compared to 2023, as its team works on the launch of the next generation EVs at Gigafactory Texas.
Media leaks citing people familiar with the matter say that Tesla has already informed suppliers of launching production of a long-awaited mass-market electric car, codenamed "Redwood," by mid-2025. Still, the news had a little time to lift the market mood just hours before the quarterly reports. Indeed, Elon Musk began feeding investors with endless promises for an affordable $25,000 car in 2020. A great idea that was later postponed several times, has now surfaced. Nevertheless, Elon Musk's favourite number of 420, only with a decimal point, are visible on the print screen snapshot as a decline sign, with worse levels probably still to come.
Certainly, I have no doubt the rally will reincarnate after a while, yet the growth scenario looks unlikely at this point, when any reasons for slowing productions are rather considered as based on demand stagnation and competition pressure from Chinese rivals like BYD. As for the Christmas quarter, Tesla was forced to resort to more discount offers to clearly miss profit projections. Again, the company's statement avoided reiterating its accustomed target to achieve an average annual growth rate of 50% over multiple years. Was this a coincidence? I am afraid it was not. Instead, Tesla said it just came between two growth waves, one driven by the already well-done release of Models 3 and Y, and a second wave that would only start with the next-generation vehicles.
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