Tesla stock (NASDAQ:TSLA) has declined by almost 21% over the last month (about 21 trading days) considerably underperforming the S&P 500, which remains down by about 7% over the same period. The decline is primarily driven by the broader sell-off in high-growth, high-multiple stocks, as investors brace for tighter monetary policy and rising interest rates this year. Moreover, although Tesla recently posted a stronger than expected set of Q4 2021 earnings and maintained its guidance for 50% plus growth in 2022, the company indicated that it continues to face supply chain issues this year as well, noting that it wasn’t planning to produce any new models such as the Cybertruck this year. It’s possible that this is also hurting the stock, to an extent.
Given that TSLA stock is down 21% over the last month, will it continue its downward trajectory, or is a rise imminent? Going by historical performance, there is a solid chance of a rise in TSLA stock over the next month. Out of 71 instances in the last ten years that TSLA stock saw a twenty-one-day fall of 21% or more, 65 of them resulted in TSLA stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 65 out of 71, or a solid 90% plus chance of a rise in TSLA stock over the coming month, implying that TSLA stock may be a good bet in the near term. See our analysis on Tesla Stock Chance of A Rise for more details.
Calculation of ‘Event Probability’ and ‘Chance of Rise’ using the data from the last ten years
- After moving -9% or more over a five-day period, the stock rose in the next five days on 62% of the occasions.
- After moving -19% or more over a ten-day period, the stock rose in the next ten days on 75% of the occasions
- After moving -21% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 92% of the occasions.
While Tesla stock could move higher in the near term, we estimate Tesla’s valuation at about $640 per share, which is about 24% below the current market price. Check out our dashboards on Tesla Revenue and Tesla Valuation for more details.
Below you’ll find our previous coverage of Tesla stock where you can track our view over time.
[12/30/2021] What Next For Tesla Stock?
Tesla stock (NASDAQ:TSLA) rallied by almost 16% over the last week, considerably outperforming the S&P 500 which gained about 3% over the same period. Although Tesla stock often moves with little news flow, there were a couple of notable developments in the last week. Firstly, although Covid-19 cases in the U.S. have been rising amid the spread of the more infectious omicron virus variant, investors appear to be less concerned about the economic impact this time around, as studies have shown that the variant likely causes much less severe infections. Moreover, the U.S. FDA recently granted emergency use authorization for oral Covid therapeutics from Merck and Pfizer last week, further reducing concerns about the impact of the recent virus surge. This has helped the broader markets and high-beta stocks such as Tesla. Separately, Tesla has apparently been taking more steps to secure its battery supply chain, signing a new battery supply deal with Miner Syrah Resources for graphite, which is a battery anode material. Investors also likely have strong expectations of Tesla’s delivery numbers for Q4 2021, which should be reported during the first week of January.
Now, is Tesla stock poised to grow? Based on our machine learning analysis of trends in the stock price over the last ten years, there is a 60% chance of a rise in TSLA stock over the next month (twenty-one trading days). See our analysis on Tesla Chance of Rise for more details.
Five Days: TSLA 16%, vs. S&P 500 3.1%; Outperformed market
(4% Event Probability)
- Tesla stock rose 16% over a five-day trading period ending 12/29/2021, compared to the broader market (S&P500) which rose by about 3%.
- A change of 16% or more over five trading days has a 4% event probability, which has occurred 96 times out of 2514 times in the last ten years.
Ten Days: TSLA 13%, vs. S&P 500 3%; Outperformed market
(14% Event Probability)
- Tesla stock rose 13% over a ten-day trading period ending 12/29/2021, compared to the broader market (S&P500) which rose by 3%.
- A change of 13% or more over ten trading days has a 14% event probability, which has occurred 350 times out of 2515 times in the last ten years.
Twenty-One Days: TSLA -4.5%, vs. S&P 500 2.8%; Outperformed market
(31% Event Probability)
- Tesla stock declined -4.5 % over a twenty-one-day trading period ending 12/29/2021, compared to the broader market (S&P500) which rose by 2.8%.
- A change of -4.5% or more over twenty-one trading days has a 31% event probability, which has occurred 772 times out of 2515 times in the last ten years.
Below you’ll find our previous coverage of Tesla stock where you can track our view over time.
[12/13/2021] Why We Think Tesla Stock Remains Overvalued
Tesla stock (NASDAQ:TSLA) has had a stellar run this year rising by about 38% to $1,000, taking the company’s market cap past the exclusive $1 trillion mark. Tesla has been one of the hottest momentum plays in the current market. The company’s execution has been solid, despite the Covid-19 pandemic and the ongoing semiconductor shortage, with deliveries on track to rise by almost 70% year-over-year in 2021. Tesla is also confident of growing deliveries at a rate over 50% each year over a multi-year period as it expands vehicle production facilities in Berlin, Texas, and Shanghai, and launches new models. The accelerated shift toward green and more sustainable forms of energy is also driving greater investor interest in Tesla, which remains the top global EV play.
While Tesla’s recent execution has been commendable, we remain negative on Tesla stock at its current valuation. With a market cap of about $1 trillion, Tesla trades at a relatively lofty 120x projected 2022 earnings and is essentially valued higher than the ten largest automotive companies combined. We think this is excessive for a couple of reasons. Firstly, it’s likely that the EV market is going to get a lot more competitive. The barriers to entry aren’t too high, the products are not too complex compared to internal combustion engines and mainstream automotive companies are investing in building massive scale. For example, VW alone plans to invest about $100 billion toward its EV transition in the next five years. We don’t think that Tesla is going to corner the auto market in the long run given that car buyers like variety. If mainstream players eventually deliver compelling EVs that are well-received with customers, it could change the narrative around the auto majors, and potentially hurt the valuation of pure-play EV players such as Tesla.
Tesla’s full self-driving system is also touted as a big driver of its valuation, given the company’s head start in terms of autonomous miles logged, but this is unlikely to be a winner takes all market, either. Moreover, Tesla appears to be losing some momentum here, as FSD sales growth is cooling, with fewer Tesla drivers apparently opting for the system when they buy new vehicles. We value Tesla stock at about $610 per share, about 40% below the current market price. See our analysis on Tesla Valuation: Is TSLA Stock Expensive Or Cheap? for more details on Tesla’s valuation and how it compares with peers.
[10/21/2021] Is Tesla’s Stock Still Overvalued After Its Q3 Results?
Tesla (NASDAQ:TSLA) published a stronger than expected set of Q3 2021 results despite the ongoing chip shortages and supply chain issues weighing on the automotive industry. While Tesla’s adjusted EPS rose by about 2.5x to $1.86, almost $0.34 ahead of our estimates, Tesla revenues rose by 57% year-over-year to about $13.75 billion, versus our estimate of $13.50 billion. The results are driven by strong demand for its mass-market Model Y and 3 vehicles, which saw deliveries rise 87% year-over-year, and also by the production ramp at the Shanghai Gigafactory, which now produces more cars than Tesla’s Fremont, California plant.
Tesla’s margins have also been trending steadily higher. Automotive gross margin, excluding regulatory credits, rose to 28.8% in Q3, up from 23.7% last year and 25.8% in Q2. Now Tesla’s gross margins are already well ahead of the broader auto industry average margins of under 10% , and we think that they have scope to rise a bit more in the long run, as Tesla’s ramps up sales of its refreshed Model S and X luxury vehicles and also by higher software sales. That said, the ongoing supply chain issues and the planned opening of the Texas and Berlin production facilities in the coming months could put some pressure on Tesla’s costs.
We have increased our price estimate for Tesla stock marginally to about $610 per share, taking into account the company’s stronger revenue growth, expanding margins, and upside from software sales. However, our price estimate still remains about 30% below the current market price of $866 per share, as mounting competition in the EV space from mainstream automakers and concerns of higher inflation and rising interest rates could hurt valuations for high-growth stocks. Still, our $600 billion-plus market cap estimate for Tesla is almost 2x the market cap of Toyota, the most valuable mainstream auto company. See our analysis on Tesla Valuation:Is TSLA Stock Expensive Or Cheap? for more details on Tesla’s valuation and how it compares with peers.
[10/18/2021] Will Tesla Stock Rise Following Q3 2021 Earnings?
Tesla (NASDAQ:TSLA) is expected to publish its Q3 2021 results after the markets close on Wednesday, October 20. The electric vehicle bellwether has already provided delivery figures for the quarter, noting that it sold a record 241,300 vehicles, marking a sequential increase of 20% and a year-over-year increase of almost 73%, despite the ongoing semiconductor crunch and logistics challenges. (see update below) So how are Tesla’s quarterly results expected to trend?
We expect revenues to come in at about $13.6 billion, slightly ahead of the consensus estimates of $13.50 billion. This would mark an increase of 54.5% compared to last year. Revenue is also likely to rise by about 13% on a sequential basis. While Tesla’s mass-market vehicles, the Model 3 and Y, are likely to remain the biggest driver of sales, the company has also ramped up production of its premium vehicles after temporarily pausing production for a part of Q2 to make way for upgraded models. Tesla’s recent strength in China is also likely to be key to its results this quarter.
We expect Tesla’s adjusted EPS to come in at about $1.52 per share – roughly 2x last year’s figure and marginally ahead of the consensus EPS estimates of $1.50. Profit growth is likely to be driven by Tesla’s higher delivery volumes, which should continue to improve its fixed cost absorption, and also by higher software sales relating to the full self-driving option. Tesla recently launched a new $200 subscription to the software and we think that this could also drive software sales. That said, it’s possible that Tesla could see some pressure due to the ongoing component supply crunch and rising logistics costs.
Overall, while growth is expected to remain strong, we still think Tesla stock is expensive. At its current price of roughly $840 per share, the stock trades at around 155x consensus 2021 earnings and about 16.5x 2021 revenues. Tesla’s market cap also stands at about 3x that of Toyota, the largest car marker. That being said, Tesla stock still has momentum on its side, and if the company is able to deliver an earnings beat, it’s likely that the stock will see further gains. See our analysis What To Expect From Tesla’s Q3 2021 Earnings? for a detailed overview of revenue and earnings estimates for the company and how it ties to Tesla’s valuation.
[10/7/2021] How Did Tesla Post Record Q3 Deliveries Despite The Chip Shortage?
Tesla (NASDAQ: TSLA) published a solid set of delivery numbers for Q3 2021 late last week, noting that it had delivered a record 241,300 vehicles for the quarter, a sequential increase of 20% and a year-over-year increase of almost 73%. The impressive numbers indicate that Tesla is able to overcome the considerable supply chain issues that are impacting the broader auto industry. For perspective, even Toyota, which has the most well-oiled supply chain in the automotive business, had to slash worldwide vehicle production by 40% in September on account of the global semiconductor shortage. So how did Tesla deliver despite the odds? We think there could be three broad reasons.
Firstly, Tesla focuses on more premium vehicles, and its automotive gross margins stood at almost 26% in Q2 2021, excluding regulatory credit sales, compared to margins of under 10% for the broader auto and truck space.  This puts the company in a better position to secure supply, as semiconductor companies could prioritize higher value players. We’ve seen something similar in the consumer electronics space as well, with high-margin Apple managing its chip supply much better versus the broader industry.
The current chip shortage in the automotive space is largely due to the fact that semiconductor fabs have transitioned production capacity from tried and tested legacy chips used by automakers (often 40-nanometer process node and above) to more modern chipsets with more advanced process technologies. It’s possible that Tesla’s more modern vehicle architecture is helping it adapt to the current situation more quickly. Tesla’s solid software engineering capabilities are also helping. Over Q2 2021, Tesla said that it was able to source alternative chips and write out updated software for them in a matter of weeks to integrate them into its vehicles.  This is probably something mass-market automakers can’t do so easily.
It’s also likely that Tesla’s Chinese business played a strong role in its deliveries for this quarter. EV sales in China have been booming, and it appears that Chinese players have had less trouble securing chip supply. For example, China’s premium EV players Nio and Li Auto posted 100% and 190% year-over-year growth respectively over Q3 2021. Tesla now has a big presence in China, with its Shanghai facility accounting for over 40% of its total current production capacity. This probably helped the company.
Tesla stock has largely held up despite the broader market sell-off over the last month, returning about 4%, compared to the S&P 500 which was down by close to 4%. So will Tesla stock rise further in the near-term or is a decline looking likely? Per the Trefis Machine learning engine, Tesla stock has a 61% chance of a rise over the next month. See our analysis Tesla Chance of Rise for more details.
That said, we value Tesla stock at just about $560 per share, a discount of almost 30% versus the current market price, due to mounting competition in the EV space from mainstream automakers and concerns of higher inflation and rising interest rates, which could hurt valuations for high-growth stocks. Check out our analysis on Tesla Valuation: Expensive Or Cheap
[9/29/2021] Tesla Stock Holds Up Despite The Broader Market Selloff. What Next?
Tesla stock (NASDAQ:TSLA) declined by about 1.7% in Tuesday’s trading, compared to the Nasdaq-100 which fell by almost 3% due to rising bond yields and a decline in the U.S. consumer confidence index. Although Tesla has typically been more sensitive to market declines, being a high multiple, high growth stock, it has held up better through the current volatility. In fact, Tesla stock was also up by around 5% over the last week (five trading days) compared to the Nasdaq-100 which fell 2% over the same period. The stock is also up by about 9% over the last month. Tesla is slated to report deliveries for Q3 2021 in early October, and with the company fairly consistently creating new quarterly delivery records, investors are likely anticipating another strong quarter. Per a report in Electrek, Tesla CEO Elon Musk indicated to employees that September was likely to be the “craziest month of deliveries” for Tesla. For perspective, Tesla delivered a record 201,250 vehicles in Q2 2021, marking a sequential increase of 9%, and a year-over-year increase of about 130%.
Now, is Tesla stock poised to grow? Based on our machine learning analysis of trends in the stock price over the last ten years, there is a 63% chance of a rise in TSLA stock over the next month (twenty-one trading days). See our analysis on Tesla Chance of Rise for more details.
Five Days: TSLA 5.2%, vs. S&P 500 0.07%; Outperformed market
(26% Event Probability)
- Tesla stock rose 5.2 % over a five-day trading period ending 9/28/2021, compared to the broader market (S&P500) which remained roughly flat.
- A change of 5.2% or more over five trading days has a 26% event probability, which has occurred 663 times out of 2516 times in the last ten years.
Ten Days: TSLA 4.4%, vs. S&P 500 -2.3%; Outperformed market
(41% Event Probability)
- Tesla stock rose 4.4 % over a ten-day trading period ending 9/28/2021, compared to the broader market (S&P500) which declined by -2.3%
- A change of 4.4% or more over ten trading days has a 41% event probability, which has occurred 1024 times out of 2516 times in the last ten years.
Twenty-One Days: TSLA 9.2%, vs. S&P 500 -3.6%; Outperformed market
(35% Event Probability)
- Tesla stock rose 9.2 % over a twenty-one day trading period ending 9/28/2021, compared to the broader market (S&P500) which declined by -3.6%
- A change of 9.2% or more over twenty-one trading days has a 35% event probability, which has occurred 879 times out of 2515 times in the last ten years.
[8/19/2021] How Will Tesla’s Autopilot Investigation Impact Its Stock?
Investors have been betting that Tesla’s (NASDAQ:TSLA) lead in self-driving technology – one of the most powerful trends in the auto market – will help it shape the future of transportation. However, the company’s popular driver-assistance feature, Autopilot, has come under increasing regulatory scrutiny this week, with the National Highway Traffic Safety and Administration (NHTSA) noting that it was looking into 11 cases of collisions of Tesla vehicles with parked vehicles of first responders. Moreover, two U.S. Senators have asked the U.S. Federal Trade Commission to investigate if Tesla’s naming of its driver-assistance systems “Autopilot” and “Full Self-Driving” were deceptive. Tesla stock declined by about 4% over the last three trading days, partly due to the news. So what do the recent developments mean for Tesla’s self-driving ambitions?
While the reported crashes are obviously concerning, safety-related incidents and investigations are part and parcel of the automotive business and we don’t see this as meaningfully altering the course of Tesla’s self-driving business. There is data that indicates that Tesla’s driver assistance systems actually make its cars safer. Tesla publishes vehicle safety reports every quarter, and based on its Q1 2021 data, it said that it registered one accident for every 4.19 million miles driven with Autopilot engaged, compared to one accident for every 2.05 million miles driven without Autopilot, but with the company’s other active safety features. Accident data compared over the last three years, in terms of total miles driven with Autopilot engaged, has also been on the decline. That said, Tesla’s current marketing might appear to make customers think that human oversight of the vehicle may not be necessary and this is probably an area that regulators could likely force the company to make changes to.
Sales of Tesla’s self-driving software appear to be growing nicely, despite increasing news reports of crashes in recent years. Although Tesla doesn’t break out software sales, the company’s automotive gross margins have been trending steadily higher (25.8% in Q2, up from just 18.7% last year) indicating attach rates for software, which is typically very high margin, are likely rising. Moreover, Tesla has also raised prices on the software, to about $10,000 presently from around $5,000 levels in 2019, reflecting the rising demand and capabilities. Tesla has also launched a new $200 subscription to the software and we believe that this could drive adoption further. We should have a lot more details on Tesla’s progress with autonomous driving when the company hosts its first AI Day event on Thursday evening.
We value Tesla stock at about $560 per share, a discount of almost 20% compared to the market price. See our analysis Tesla Valuation: Is TSLA Stock Expensive Or Cheap? for more details on Tesla’s valuation and how it compares with peers.
[Updated 7/3/2020] Tesla: King Of Self-Driving Cars?
Tesla stock (NASDAQ: TSLA) is up over 150% year-to-date, with its market cap crossing $200 billion. Hard to fathom. Why? When you look at a more traditional metric like the number of cars sold, Tesla is tiny – less than 400K cars sold last year, while many of the bigger companies, Honda, GM, Ford, Toyota, each sold over 5 million cars. Correct, Tesla sold a fraction of the cars sold by many of the other car companies and is more valuable than all of them.
So what’s driving Tesla’s value?
It’s partly the improving fundamentals (better than expected Q1 results and Q2 deliveries, strong sales in China), but there has to be more. Investors are likely betting that the disruption caused by Covid-19 could solidify Tesla’s position as the leading electric and autonomous driving play – two separate, and perhaps the most powerful trends in the auto industry. At the same time, there are signs some mainstream automakers are slowing down their investments in the space while they navigate a collapse in sales and manage significant near-term financial pressures.
For instance, BMW and Mercedes-Benz announced that they will end their automated driving alliance, for now, citing current business and economic conditions, among other factors.  Here’s the thing: the primary function of cars is to drive. Tesla’s focus on self-driving while some others are either backing out or showing lackluster progress, is akin to a small cereal manufacturer doubling down in the “sweet” category of breakfast cereals, while others say they’ve chosen to back out of it. Can you believe that?
It’s not even close: we lay out the numbers on how big could self-driving be, and contrast with others in our interactive dashboard analysis: Just How Far Ahead Is Tesla In The Self-Driving Race?
Miles logged are a crucial metric for autonomous cars, as self-driving algorithms are based on machine learning, and more training data makes algorithms smarter. Tesla continues to make solid progress on this front, reporting that its vehicles had logged a total of 3 billion miles on Autopilot as of April 2020 – up from a cumulative 1 billion miles it reported in late 2018. This is well ahead of its nearest rival, Waymo (backed by Alphabet), which reported that its test vehicles had logged 20 million miles on public roads as of January.  While Waymo has been “testing”, Tesla is simply doing it! The strategy is simple yet bold: sell cars directly, add self-driving features with a whole bunch of warnings, and collect data while users use it. Shouldn’t Google buy Tesla or perhaps another carmaker and do the same? See how Tesla’s value could rise to $1.5 trillion aided by a deal with Google.
Tesla also appears to be more confident about the capabilities of its system. The company bumped up pricing for its full-self driving software upgrade from $7,000 to $8,000 starting July 1, and CEO Elon Musk has indicated that prices could only keep inching upward going forward as capabilities are added. Tesla is toying with the idea of offering its self-driving software as a subscription service – a move that could boost recurring revenue streams for the company while potentially increasing the adoption of the package.
Is this a good time to jump into Tesla stock? Yes – especially if you believe in this one important Tesla metric: Tesla’s time horizon. On the flip side, for a more balanced, risk-adjusted view see our analysis Tesla Valuation: Jump Into Tesla, Wait, Or Get Out?
Autonomous driving cars have emerged as a hot buzzword in the automotive industry over the last few years, with companies ranging from mainstream automakers such as General Motors to Silicon Valley startups such as Waymo (backed by Alphabet) looking to make a dent in the market. However, electric vehicle pioneer Tesla (NASDAQ: TSLA) appears to have a sizable early lead in this space both in terms of autonomous miles driven as well as monetization of its self-driving technology. Having delivered over 780k vehicles since its inception, most of which come with pre-installed self-driving capabilities that users can unlock by paying for software, the company has developed a meaningful self-driving business. In this analysis, we compare Tesla’s miles logged with rivals and size up the near-term revenue potential for its autonomous driving software.
Tesla Is Approaching 2 Billion Self-Driving Miles Driven
- Tesla’s total autonomous miles logged has grown exponentially from 0.1 billion in May 2016 to an estimated 1.88 billion as of October 2019.
- This is a crucial metric, as self-driving algorithms are based on machine learning, and more training data typically makes the algorithms smarter.
Tesla’s Log Of Autonomous Driving Data Is Orders Of Magnitude Higher Than Rivals
- Over 2018, Tesla likely logged about 500 million self-driving miles across all geographies.
- In comparison, rival autonomous driving tech companies Waymo and GM’s Cruise drove just 1.3 million and 447k miles, respectively, in California – their primary test market, which likely accounts for a bulk of their total miles logged.
Tesla’s Lead May Be Wider Still, As It Continuously Gathers Data From All Its Vehicles
- Tesla’s autonomous driving hardware is based on mature technology such as Radar, Ultrasonic, and Passive video, which is cheaper than some rivals who use LIDAR – a laser-based system.
- This enables the company to equip the hardware as standard in all its vehicles, irrespective of whether or not a user enables it by paying money.
- As the company’s vehicles are estimated to have driven over 16.8 billion miles in total thus far, this could be further enhancing Tesla’s log of driving data.
What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.
|S&P 500 Return||-7%||-7%||98%|
|Trefis MS Portfolio Return||-11%||-11%||248%|
 Month-to-date and year-to-date as of 1/30/2022
 Cumulative total returns since the end of 2016