Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 14 Feb, 25 | TSLA | Buy | USD 355.94 | USD 375.0 | USD 400.0 | 90 days | 12.4% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
Tesla, Inc. designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems in the United States, China, and internationally. The company operates in two segments, Automotive, and Energy Generation and Storage. The Automotive segment offers electric vehicles, as well as sells automotive regulatory credits; and non-warranty after-sales vehicle, used vehicles, body shop and parts, supercharging, retail merchandise, and vehicle insurance services. This segment also provides sedans and sport utility vehicles through direct and used vehicle sales, a network of Tesla Superchargers, and in-app upgrades; purchase financing and leasing services; services for electric vehicles through its company-owned service locations and Tesla mobile service technicians; and vehicle limited warranties and extended service plans. The Energy Generation and Storage segment engages in the design, manufacture, installation, sale, and leasing of solar energy generation and energy storage products, and related services to residential, commercial, and industrial customers and utilities through its website, stores, and galleries, as well as through a network of channel partners; and provision of service and repairs to its energy product customers, including under warranty, as well as various financing options to its solar customers. The company was formerly known as Tesla Motors, Inc. and changed its name to Tesla, Inc. in February 2017. Tesla, Inc. was incorporated in 2003 and is headquartered in Austin, Texas.
Increase in Current Ratio
(2.02x in FY24 vs 1.73x in FY23)
Lower Debt-Equity
(0.11x in FY24 vs the Industry Median of 0.35x FY23)
Decrease in Gross Margin
(17.9% in FY24 vs 18.2% in FY23)
Decrease in Operating Margin
(14.0% in FY24 vs 13.4% in FY23)
Price Competition and Margin Pressure, Supply Chain Challenges, Regulatory Risks, Production and Scalability Issues, Technological Risks, etc.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 355.94 | 279.0 | 375.0 | 400.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Revenue Growth- Tesla’s total revenue for Q4FY24 increased by 2% YoY, reaching USD 25.7 billion. The revenue growth was driven by several key factors: notable expansion in the Energy Generation and Storage and Services and Other segments, an increase in vehicle deliveries, and higher regulatory credit revenue. However, the overall revenue performance was partially offset by a decline in the average selling price (ASP) of the S3XY vehicles (excluding foreign exchange impact), attributed to strategic pricing adjustments, attractive financing offers, and a shift in product mix.
Profitability Decline- Tesla’s operating income for Q4FY24 saw a 23% YoY decrease, falling to USD 1.6 billion, leading to an operating margin of 6.2%. The decline in operating income was largely driven by the reduced ASP for the S3XY vehicles. Additionally, operating expenses grew due to increased investment in artificial intelligence (AI) and other research and development (R&D) initiatives. However, the company experienced positive contributions from higher gross profit in the Energy Generation and Storage and Services and Other segments.
Improved Cost Structure- Tesla’s cost per vehicle showed improvement, with a reduction in raw material costs contributing to the overall decrease in costs. This was partially offset by lower fixed cost absorption resulting from a decrease in production volumes compared to the previous year. Despite the challenges in ASP and fixed cost absorption, the company managed to achieve efficiency gains that helped mitigate some of the negative impacts on profitability.
Strong Cash Position-Tesla ended Q4FY24 with a solid cash position, totaling USD 36.6 billion in cash, cash equivalents, and investments. This marks a sequential increase of USD 2.9 billion from the previous quarter, driven by strong positive free cash flow of USD 2.0 billion. The healthy cash reserves are an important indicator of Tesla’s financial stability and its ability to fund future growth and investments, particularly in key areas such as vehicle production, energy storage, and R&D.
Record Vehicle Production and Deliveries- Tesla achieved a significant milestone in Q4FY24 with the production of approximately 459,000 vehicles and deliveries of over 495,000 vehicles. This marked a record for both production and vehicle deliveries, underscoring Tesla’s strong operational capabilities. Specifically, the Model 3/Y segment accounted for the majority of production and deliveries, with 436,718 vehicles produced and 471,930 delivered, while the remaining vehicles were from other models.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Tesla Inc (NYSE: TSLA) at the closing price of USD 355.94, as on February 13, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Consumer Cyclical Industry: Auto Manufacturers
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| TSLA Tesla Inc |
15.64 6.03% | 274.80 | 45.91 | 67.57 | 5.67 | 8.35 | 12.42 | 58.23 |
| TOYOF Toyota Motor Corp |
-0.5 2.78% | 17.50 | 8.97 | 9.44 | 0.0059 | 1.11 | 0.0097 | 0.05 |
| TM Toyota Motor Corporation ADR |
-2.01 1.14% | 174.52 | 8.87 | 9.34 | 0.0052 | 1.07 | 1.27 | 6.98 |
| BYDDY BYD Co Ltd ADR |
-2.47 2.43% | 98.99 | 22.64 | 15.60 | 0.17 | 4.62 | 1.08 | 16.52 |
| BYDDF BYD Company Limited |
-1.22 2.41% | 49.50 | 22.68 | 15.62 | 0.17 | 4.63 | 1.08 | 16.52 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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