When it comes to Tesla’s CEO Elon Musk, there is never a dull moment. He's either operating a few billion-dollar businesses, creating gigafactories, battling Twitter, sending rockets into space, working on populating Mars, connecting human brains to computers, and building tunnels under USA cities. And now with Tesla’s ongoing success, and a 3-for-1 stock split on Aug 24, this benefit makes investments easier for company employees and enthusiastic retail investors. It is Tesla's second split in over two years.
Musk's remarks at the corporate shareholder meeting marked another significant development. He praised Tesla's profitability, claiming that it had recently attained an industry-leading operating margin, and he said this accomplishment was the result of an unrelenting search for efficiency in plant layout, automation, and inventions.
The Manufacturing Advantage
Musk claimed that manufacturing efficiency might be Tesla's biggest competitive edge. Additionally, rather than vehicle manufacturing or self-driving cars, robotics powered by AI may present Tesla with its greatest chance, according to Musk. And Tesla is expected to improve its efficiency even further in the future. The recently opened Gigafactory Berlin will lower logistics costs by localizing the company's European operations, which will result in a reduction in the number of automobiles that need to be shipped from the U.S. and China to Europe. Tesla also has plans to use a technology that will decrease the price of making batteries in half.
Growth with Earnings and Revenue
In terms of stock value, Tesla can appear to be expensive. But for several consecutive quarters, the corporation has produced enormous earnings and revenue growth. Estimates of the company's annual earnings also demonstrate that its growth trajectory is still very much intact. Tesla recently reported that in the second quarter, it had shipped 254,695 electric vehicles worldwide. That fell short of analysts’ forecasts of 264,000 and was down 18% from the prior quarter. One factor contributing to the slowdown was China's prolonged coronavirus shutdown. Additionally, restrictions on establishing manufacturing facilities in Austin and Berlin had an influence.
There is an emerging list of rivals in the EV space as the industry continues to evolve. It is only with time that we will see any clear-cut winners over taking the current leader. Tesla competitors include Rivian, General Motors, and Ford and all its rivals in China. Also, now that Tesla is making cars in Germany, it will go head-to-head in electric vehicles with three established German names: Volkswagen Group, BMW, and the Mercedes-Benz division of Daimler AG.
Cybertruck's rival, Rivian.
Tesla is fraught with great uncertainty. If mass-market consumers do not adopt the new powertrain technology due to its greater costs and worse function, electric vehicles may remain a niche industry (range, recharge time, and availability of charging). Other powertrain technologies may also have an impact on electric vehicles. Due to its high degree of cyclicality, the automobile industry is susceptible to sudden drops in demand. Tesla faces increasing competition from both established automakers and newcomers as the industry leader in EVs.
Is Tesla Stock a Good Stock to Buy?
With its technologies for EVs, driverless vehicles, batteries, and solar generation systems, Tesla has the ability to upend the automotive and power generation industries. As Tesla lowers the cost of producing each unit over the next few years, its profit margins will increase.
Tesla delivers the finest functionality of any EV on the market thanks to its industry-leading technology and distinctive supercharger network, which should lead to its maintaining its market-leading status as EV adoption rises.
But...the pessimists say...
Because traditional automakers are making significant investments in EV research and development, Tesla may lose market share and experience a slowdown in its sales growth as a result of the increased competition. Government programs like restrictions and subsidies, which will impede Tesla's long-term market expansion, are the main drivers of EV adoption. Prices for solar panels and batteries may fall more quickly than Tesla can lower expenses, which would leave the energy generation and storage industry with little to no profits.
Trading stocks requires precise timing. In order to identify lower-risk entry positions that also show attractive potential rewards, it is necessary to conduct both fundamental and technical analysis while looking for stocks to buy or sell.