Many investors still just think of Tesla, Inc. (NASDAQ: TSLA) in two simple ways — Tesla’s EV dominance and Elon Musk. It is all too common for investors to focus on earnings reports and the growth of a company that has already happened. Professional traders and long-term investors know that they have to look forward to what a company and its financials will look like in the quarters and years ahead. Tesla’s energy backup business and robotics may be a much larger piece of the total equation. Make no mistake about evaluating Tesla’s earnings and revenues now and in the immediate future — even with a 10% drop from a year ago, Tesla did manage to sell more than 300,000 EVs during the first half of 2024 alone.
Tesla also produced 410,831 total EVs in Q2-2024, with deliveries of 443,956 total EV units. And while the company is focused on cost-cutting measures, the company did end Q2-2024 with cash and equivalents of $30.7 billion. That was up $3.9 billion sequentially after $1.3 billion in positive free cash flow. It posted a $1.8 billion inventory decrease and included $600 million or so in AI infrastructure capital spending.
Oggonomics has tracked a new analyst rating on Tesla. More important than one call’s rating is the catalyst(s) behind the call. Another core issue is how that call looks against other analysts out there. It’s time to look and see if Tesla’s entire business model needs to be reconsidered by investors. Again, it’s about what’s ahead rather than what led up to now over the last decade.
WHY WILLIAM BLAIR SAYS “BUY TESLA!”
Jed Dorsheimer, an analyst at William Blair, has opined that Tesla could become “the Apple of energy.” His new report issued a Buy rating but comes without a formal price target. Tesla Energy is considered to be the most underappreciated component of the Tesla story amid lower EV sales and lower EV expectations ahead. Three main drivers were highlighted here for Tesla’s energy storage — A.I. data center buildouts; electric grid stabilization; and the integration of renewable energy.
Megapack and Powerwall are both considered to be leaders in their space. Dorsheimer’s Apple Inc. (NASDAQ: AAPL) reference is with Tesla creating an “Apple-esque ecosystem for the future of energy. This combines its leadership in EV sales, with longer-term views of its A.I. efforts, the coming robotaxi and even its efforts in robotics.
Tesla’s large battery packs for homes and even larger battery packs for utilities and enterprises being mixed with solar roofs and solar fields is considered to be a tailwind with artificial intelligence data centers. And while it is easy to refer back to EV dominance, Tesla’s energy storage and generation accounted for about 12% of revenues in the second quarter with segment growth up about 100%.
Adding Tesla’s core units into an ecosystem would also encompass software and systems running in your home, at businesses and at utilities. The recent drop of more than 5% in its stock may be tied to the tech stock slide in Nasdaq mega-caps but it can also be blamed on weak post-earnings trading of Li Auto and BYD ADSs. While Li and BYD met/beat expectations, they are under the cloud of slowing EV demand and sales growth. Tesla also faces uncertainty over E.U. tariffs and the U.S. and Canada having tariffs on EVs from China.
WHAT ABOUT OTHER ANALYSTS SAY ON TESLA
It is important to also consider other outside analyst reports. On July 24, 2024, after earnings, multiple firms issued updates to the price targets:
- Truist (Hold) to $215 from $162
- BofA (Buy) to $255 from $260
- Goldman Sachs (Neutral) to $230 from $248
- Piper Sandler (Overweight) to $300 from $205
- Citigroup (Neutral) to $258 from $274
And while BofA’s Buy rating above is positive, the difference between it and William Blair’s Buy-equivalent rating is that BofA’s report is almost entirely positioned around EV sales.
And after earnings in July, a firm called KGI Securities was reported by Barron’s as downgrading Tesla to Hold from Buy – but with a price target hike to $236 from $210.
And in August, other calls were seen as well. RBC Capital Markets maintained an Outperform rating while trimming its price target to $224 from $227 in its call.
Other analyst reports were seen with equivalent of Buy, Sell and Hold ratings but were not included if the firms are not well-known or if their price targets were left unchanged.
SHORT SELLERS – ELON HATES YOU!
Another aspect of evaluating Tesla is through the eyes of a short-seller. And if you are short, Elon Musk isn’t your biggest fan. Look up Musk’s interaction with Bill Gates and you will see what the passion against short sellers is really about. The NASDAQ Short Interest as of August 15, 2024 was 81.9 million shares. That may seem high, but look at the trajectory of what the total short sellers’ open interest has been for recent months in 2024 after rising earlier in the year:
- 08/15/2024 — 81,972,363
- 07/31/2024 — 86,969,962
- 07/15/2024 — 104,460,574
- 06/28/2024 — 105,201,302
- 06/14/2024 — 105,382,772
- 05/31/2024 — 101,325,315
- 05/15/2024 — 104,790,820
- 04/30/2024 — 107,440,586
- 04/15/2024 — 106,659,131
- 03/28/2024 — 107,481,521
- 03/15/2024 — 102,298,924
- 02/29/2024 — 95,932,821
- 02/15/2024 — 88,650,515
- 01/31/2024 — 90,710,966
- 01/12/2024 — 80,466,304
- 12/29/2023 — 86,666,279
If the short interest peaked at 107.5 million shares in March and has seen four consecutive declines to 81.97 million shares short on August 15, does it mean short sellers are scared now?
HOW TESLA HOLDS ITSELF TO THE PUBLIC
While visiting Tesla’s website is first about its cars and the cybertruck, it also shows the solar panels, the entire solar roof, and the Powerwall. And under accessories is the Tesla charging station. When you go to the investor relations site, the first thing you see is one of Tesla’s robots working in front of a laptop computer.
THE STOCK
Tesla’s stock rose 3% to $212.00 in early trading on Thursday. Its 52-week range is $138.80 to $278.98 and Finviz lists its consensus analyst target price as $215.77. Its shares were down almost 15% YTD and down 17.7% from a year ago. The NASDAQ-100 was last seen up 16% YTD and up 27% from a year ago.
DISCLAIMER
The opinions herein are mostly presented from outside research reports named above. Neither investors nor traders should consider this view on Tesla as investment advice. The information is not presented as a recommendation to buy or sell any securities. All decisions to buy, sell (including shorting or ETFs) or hold are the responsibility of each investor and should be made with a financial advisor.
