Tesla is rarely out of the news, whether it be for a new emotional hurricane among EV amateurs and splashes of interest from investors and traders. This year the company continues to be one of the most talked-about (and traded) stocks.
Risks and rewards of owning Tesla (TSLA) shares in 2019
Tesla's market performance has never been smooth. A roller coaster is the best way to describe the TSLA stock price movement. In 2018, its 52-week price extremes ranged from a low of $244.59 to a high of $387.46.
However, the production and delivery figures for Q4 2018 look impressive and show signs of promise. Tesla produced 86,555 vehicles and delivered 90,700. It is 8% higher than in Q3 2018.
These growth numbers were achieved mostly due to the Model 3. The production of this budget-segment car promised to transform Tesla into a mass-market car manufacturer. As production numbers look strong, experts believe in Tesla’s further growth in 2019 and beyond, making TSLA a stock to buy.
What could impede Tesla's growth?
Tesla continues to be plagued by issues relating to its leadership and management, with many focusing on the unpredictable behaviour of the company’s CEO, Elon Musk. Though it’s also a disputable matter, many analysts and TSLA investors would prefer the company to solve and put its management issues aside.
Tesla’s further success will also greatly depend on how the company differentiates its offering from the rising competition of other established global EV producers like Ford, Volkswagen, BMW, General Motors and Daimler.
Moreover, if Tesla changes its offering, including prices or vehicle types, customers have been known to express their frustration and confusion. With constant shifts in pricing, the TSLA stock price may take a hit, caused by uncertainty in expected earnings and sales numbers.
Despite rapid revenue growth, Tesla’s financial stress has become evident. In January, the company cut 7% of its workforce, marking the second round of job culls in the last 8 months. This measure was aimed to reduce operating costs by $400 million annually.
The Model 3, selling at $35,000, has long been considered as a potential gateway to the automobile mass-market. In January, Elon Musk predicted the global demand for the Model 3 to reach around 800,000 cars.
In February, Mr Musk announced a plan to close all brick-and-mortar showrooms in an attempt to cut costs and produce the low-priced Model 3 at a profit. Less than 2 weeks later, the company's management changed its mind and decided to keep many stores open.
Despite all the recent controversies, Tesla keeps its position as a high-growth company, with an expected stock price growth of 30% for 2019. The current plans to open Tesla’s first factory in China in late 2019 will potentially boost the company’s capacity and will allow the company to reduce the price of the Model 3 in the Chinese market.
With that said, TSLA is not without its risks. Does Telsa stock take your fancy?
Image source: Sundry Photography / Shutterstock.com
|Today, 18 February, 2020|
|02:30||HIGH||RBA Meeting Minutes|
|02:30||HIGH||ILO Unemployment Rate (3M)||3.80%|
|02:30||HIGH||ZEW Survey - Economic Sentiment||15|
|19 February, 2020|
|11:30||HIGH||Consumer Price Index (YoY)||1.30%|
|15:30||HIGH||BoC Consumer Price Index Core (YoY)||1.80%|
|15:30||HIGH||Building Permits (MoM)||1.45M|
|15:30||HIGH||Building Permits Change||-0.10%|