Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Chief Macro Strategist
Access both platforms from your single Saxo account.
Tesla just announced record sales. Is it all rosy ahead for Tesla's stock?
Summary: Tesla's stock is up +159% in 2023 and it just announced record sales this quarter. Is it all rosy ahead for Tesla's stock? We should look deeper into the numbers.
Tesla's stock popped up another +7% after announcing another record sales in Q2 2023 on Friday. 2 insights:
1️. Aggressive price cuts are a big catalyst behind the record sales figures, but it doesn't mean this will translate into higher profits.
In 2023 alone Tesla has cut its cars' prices by 6 times already. The purpose behind slashing prices is to retain dominance in an increasingly crowded Electric Vehicle (EV) market. But cutting prices ultimately comes with a cost. We will know the true picture on July 19th when Tesla announces it Q2 earnings results.
In the meantime 2 things also matters:
1) While Tesla has been cutting prices the key ingredient to manufacture their batteries called lithium carbonate has increased 34% over the past 3 months.
This will negatively impact their bottom line.
2) Tesla's unsold inventory is still a concern.
When we look deeper into the figures Tesla still produced 91,000 more cars than it sold in Q2.
Although this figure is shrinking versus prior quarters, the buildup in unsold cars equates to about US$4.2 billion in value (assume US$38K per car). So, there are reasons to not just blindly celebrate on Tesla's success.
2️. How should Tesla's current valuation be read?
Tesla has its work cut out for it based on what the expectations based into the stock price. For example, with the expected revenue of US$99.9 billion in 2023, for Tesla that would translate into an aggressive +17.1% annualized revenue growth rate over the next 10 years. But no car manufacture has ever remotely reached these numbers.
Taking a comparison from another growth industry was in 2011, Apple hit US$108 billion in revenue and the subsequent 10-year revenue growth rate was 12.9% annualized. But this growth rate was obtained by Apple with lower priced consumer hardware and selling digital goods. Apple was operating in an industry with little meaningful competition at the time.
So this may not be a great comparison for Tesla but still highlights that the road ahead may be challenging for Tesla to meet these elevated expectations. Clearly Tesla has other trump cards up its sleeve like potentially becoming the standard for charging stations amongst US EVs.
Share this research with just a click of the sharing icon next to the article title, you can also post it directly to LinkedIn, Twitter, Facebook or even send it via email.
Join our community of traders and investors by sharing valuable insights.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: The ride just got rougher
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
China Outlook: The choice between retaliation or de-escalation
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
Commodity Outlook: A bumpy road ahead calls for diversification
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX outlook: Tariffs drive USD strength, until...?
John J. Hardy
Chief Macro Strategist
-
Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)