Tesla Stock Stuck In A Range: Analyst Points Out Key Catalysts And Risks

Tesla vehicles stand outside a Brooklyn showroom and service center, in New York City. The string of price cuts Tesla has announced since the start of the year have led to a decline in automotive gross margin. (SPENCER PLATT/GETTY IMAGES)

Tesla, Inc. (NASDAQ:TSLA) stock has pulled back about 14.7% from the pre-earnings level of $291.26 and has been between the $210 and $265 levels since then.

The downtrend was set in motion by the man himself. Tesla CEO Elon Musk set off worries concerning further margin erosion by stating in the second-quarter earnings call that a rising-rate environment could necessitate more price cuts.

Tesla vehicles stand outside a Brooklyn showroom and service center, in New York City. The string of price cuts Tesla has announced since the start of the year have led to a decline in automotive gross margin. (SPENCER PLATT/GETTY IMAGES)

The string of price cuts Tesla has announced since the start of the year have led to a decline in automotive gross margin, excluding regulatory credits. The metric tumbled from near 30% at the start of 2022 to 18.1% in the second quarter of 2023, data from FactSet showed, Investor.com reported.

Despite the price cuts, volume growth proved elusive for Telsa in some key geographies such as China and Europe. In China, Tesla was a victim of the price war it started, as domestic manufacturers, such as BYD Company Ltd. (OTC:BYDDY) (OTC:BYDDF), followed up with their own price cuts.

Tesla vehicles stand outside a Brooklyn showroom and service center, in New York City. The string of price cuts Tesla has announced since the start of the year have led to a decline in automotive gross margin. (SPENCER PLATT/GETTY IMAGES)

In a post on X on Friday, Tesla investor and Future Fund Managing Partner Gary Black shared some key near- and medium-term events that could determine the trading direction of the stock.

The fund manager outlined the following as catalysts for the stock:

• Model-3 refresh, which will likely create new demand
• Cybertruck launch, which will likely create a new total addressable market
• Full-self driving Level 4 autonomy/licensing deal
• $7,500 instant rebate coming into effect in Jan. 2024
• 2024 Street estimates being too low
• Halo effect from new products
• $25,000-$30,000 next-gen vehicle

Among the risks that could weigh down on the stock are:

• Further price cuts/negative revisions
• New competitors’ EVs
• M-Y ubiquity
• No advertising or PR
• Autopilot/FSD regulatory risk
• Musk potentially combining all his companies under the Tesla umbrella

Tesla ended Friday’s session down 1.19% at $248.50.

 

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Edited by Arnab Nandy and Newsdesk Manager