Jack Ma and Tesla haven't changed, it's your heart that has changed.
This morning TSLA released its 24Q1 earnings report:
--Revenue of $21.3 billion, below the expected $23.3 billion
--Adjusted EPS $0.45, below the expected $0.58
--Free cash flow negative $2.53 billion, below the expected positive $1.19 billion
--Gross margin 17.4%, above the expected 16.9%
Guidance
-- Tesla's vehicle delivery growth rate in 2024 may be significantly lower than the growth rate in 2023
--Will accelerate the launch of more affordable economy models, "slapping in the face" of recent media reports canceling the development of Model 2
Reasons for the surge
This earnings report can hardly be said to exceed expectations, but TSLA surged 10% after hours, what's the reason?
(1)The reversal on Model 2 may be key, accelerating the launch of Model 2, planned for the second half of 2025
(2) The earnings call emphasized Tesla's autonomous driving and AI attributes:
--If anyone doesn't believe Tesla can solve the Full Self-Driving (FSD) problem, they shouldn't be Tesla investors
--AI training compute increased by over 130% in Q1, with $1 billion invested in AI in the first three months of this year. By year-end, there will be 85,000 H100 chips for AI training
--Currently in talks with a major automaker about licensing the "Full Self-Driving" system (FSD)
--In the future, will operate millions of "Robotaxis," forming a robotaxi fleet similar to Uber's ride-hailing service. Tesla owners will also have the opportunity to rent out their Tesla cars for ride services. Plans to disclose more details about Robotaxi in August
(3) The key is that TSLA was already in extreme pessimism before earnings, with RSI hitting a low of 14.09, indicating severe oversold conditions.
Should you buy Tesla now?
(1) TSLA faces tough challenges in 24Q2:
--As of the end of March, Tesla's global unsold inventory was 28 days, up from 15 days at the end of last year. The company guides that 24Q2 inventory will rise.
--Recently announced another round of price cuts. Gross margin may continue to decline
(2) At the same time, Tesla is going all out on FSD: Starting March 16, 2024, began rolling out the latest FSD Beta V12.3 version of advanced driver-assistance systems to all FSD orders and subscription users in the U.S., and on April 13, reduced the monthly subscription fee by 50% to $99. In North America, the FSD buyout price dropped from $12,000 to $8,000, and in Canada from $16,000 to $11,000. FSD will be a positive driver for Tesla.
But whether it's autonomous driving or affordable models, these are currently just promises—the key is whether you believe in them. If you believe, it's cheap now; if not, treating it as just another automaker makes it expensive.
(3) Morgan Stanley's valuation of Tesla is very meaningful: By 2030, the base case price target is $310. The automotive business is only worth $62
--Automotive business worth $62
--Energy business worth $38
--Insurance business worth $5
--Mobility services (Robotaxi) worth $61
--Network services worth $104
--Third-party EV system training worth $39
$Tesla(TSLA.US)
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