Let’s check in on a stock we haven’t mentioned in a while – Tesla (TSLA). We’ve been bearish on this one for a while. It was the first mover and, really, the only viable competitor in the EV space for years. But since its production ramp in 2019, a lot of competition has entered the fold.
Legacy auto companies are increasingly electrifying their own models. Plus, a swath of new entrants are coming into the market. And many – like our favorites Rivian (RIVN), Lucid (LCID), and Fisker (FSR) – are growing nicely. As a result, Tesla has and will continue to lose market share over the next few years.
The stock has come down quite a bit. Normally, we’d say to take profits on the short and move on. But the bear thesis is actually getting stronger. Elon Musk’s Twitter takeover and injection into the political realm has not been a good move for Tesla. We think it will continue to see a net loss in customers, and the share price will keep falling. Regaining momentum will require some significant changes. And until that happens, Tesla stock will remain a dead duck.
Now, does this bear thesis translate for the company’s energy storage business? We think that’s the one thing keeping Tesla afloat – and the one reason we won’t get too bearish on it. Its energy storage business is scaling nicely, and it seems the company owns the residential market in this sector. Growth there will partially offset EV industry market share erosion. But at the end of the day, Tesla began as a trillion-dollar EV maker. And that means that in order to make its stock price work, it must execute flawlessly in the electric vehicle sector. Will it regain lost traction?
Hear all our thoughts in this week’s episode of Hypergrowth Investing!
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.