Why Tesla Stock Doesn’t Work on Autopilot Now |  information

Why Tesla Stock Doesn’t Work on Autopilot Now | information

investors of Tesla-Aktien (WKN: A1CX3T) recently had a bit of fun with the share price performance of their shares. Because Tesla stock is about 23% lower than it was two and a half weeks ago. Meanwhile, the price-to-earnings (P/E) ratio based on trailing twelve-month earnings is currently around 90. So there is certainly still room for a price pullback if the electric car maker doesn’t. work as it is. hope

Value charts in articles

Investors got a taste of this on German Unity Day. Tesla shares fell 8.6% as the US company missed expectations for third-quarter vehicle shipments by nearly 20,000 vehicles, or about 5%.

That raised concerns among investors that the pent-up demand for Tesla’s electric cars could be affected by the coming recession. In the past weeks, delivery times in China had already decreased significantly. Is an electric car maker sitting on a drying order book? Is Elon Musk wrong about his plans for rapid growth?

Tesla Storage: Is there a demand problem?

One thing is certain: If Tesla does not deliver the sales growth that market participants are currently expecting, Tesla stock could go into free fall. That’s because the stock’s valuation is higher than other automakers, which typically trade at a P/E ratio below 10.

So how do you rate the demand risk for Tesla stock?

First of all, I think the use of waiting times in China is a poor measure of demand. Because these waiting times do not depend only on the basic interest in Tesla electric cars, but on various other factors, including exports to other countries, where the waiting time is sometimes longer. So we are not dealing with a clear signal of demand.

In addition, the decrease in waiting time directly ensures an increase in interest on the part of customers. Very few customers have any objection to expedited delivery.

Tesla’s competitive position

But these points cannot hide the fact that the economy as a whole is headed for a recession, which will reduce demand for expensive goods like cars while easing temporary constraints like chip shortages. How can Tesla weather this storm?

In my opinion, Tesla stock is well-positioned to weather a rough patch. Because the electric car manufacturer in the United States is currently generating a higher profit margin than most other car manufacturers. This gives the company more room to cut prices which could be important in the coming months.

Tesla hasn’t even touched another demand lever: advertising. In contrast, CEO Elon Musk has boasted several times in the past that the number of orders at his company would increase if other automakers were at such a major event. super bowl they announced their electric cars. Tesla cars are so coveted that until now they have only been sold through word of mouth and general brand awareness.

Perhaps in some places the demand will no longer be a barrier to Tesla’s growth, as it was before. That could put pressure on Tesla stock. But after the crisis there will be an upswing again. As we just saw, the electric car maker could probably start stronger in these.

In the long run, another division at Tesla could be bigger than the electric car business.

Item Why Tesla stock is no longer on autopilot appeared first Motley Fool Germany.

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Christoph Gössel owns shares in Tesla. The Motley Fool owns the stock and recommends Tesla.

Motley Fool Germany 2022