Zaddy's Year In Review
A year ago I joined I finally started contributing to this forum as long term bull who was realizing people were ignoring short term signals of lower earnings.
I earned many, many disagrees on posts like this pointing out how earnings would be much lower in 2023 than people were expecting.
Earnings for 2023 are going to end up around $3. Much lower than people were expecting a year ago.
The idea that COGs were going to reduce in line with price cuts was a joke a year ago and I hope people have finally accepted that reality.
ASPs have been cut further and for longer than even I was expecting.
I was also hoping Tesla Energy growth would be higher than it was - but still margins are looking promising.
Given all this, the stock performance has been outstanding.
What To Expect in 2024
Unfortunately, its still possible further price cuts are needed in 2024.
Reason #1: Used Tesla car prices have started declining again after flatlining in November
Reason #2: Even with the Model 3 tax credit going away (allegedly), Tesla has been cutting inventory prices on both Model Y and 3. You would think the EV credit ending would stimulate demand for Model 3, but nope.
Reason #3. No tax credit for Model 3 in 2024. If true, this is a killer for Model 3 margins. People who were buying the cheaper Model 3s this year won't have anything to buy in their price target. Model Y's will certainly be preferred. If Tesla can produce more Model Y's that would be great, but model 3 production lines will loose economies of scale.
So for right now, I certainly expect automotive Q1 2024 earnings to be even worse than Q4 (which could be worse than Q3).
Automotive earnings declining again and again....
Not good.
(btw please don't lazily claim I'm a bear because I'm pointing out very relevant information, do better).
Model 3 highland refresh should boost demand a bit, but I don't think it overcomes a $7500 loss in credit for consumers. No proof COGs are dramatically reduced in highland.
Given Elon's comments about V12 performance in a somewhat obvious occurrence (heavy precipitation), it is nowhere near robotaxi level. Advanced L2 will be delivered in 2024 but that's not enough to boost margins signficantly.
Positives for 2nd half of 2024
I still think margins have to hit a minimum Q1 or Q2 in 2024. Interest rates steadying and lowering a bit should help some with this.
Energy revenue will double quarterly and profits may contribute $0.3 in a quarter.
Cybertruck at volume production in Q3 or Q4 could provide $0.25 in a quarter.
I think Bot will produce revenue (or reduced costs) for Tesla before robotaxis - further demonstration of it's useful capabilities in 2024 may allow institutions to model it in future growth.
I do expect in a year from now for quarterly earnings to be back over $1 thus high growth from what will come out of this pathetic 2023 Q4.
A forward PE ratio of 60 on 2025 earnings (say $5 - $6) could bring $300 to $350 before end of next year. But this will happen when the market realizes the positives I've laid out will happen. I'm not seeing that right now nor after Q4 earnings for sure. Maybe Q1 or more likely Q2 earnings.
So my stock predictions are:
On top of a macro correction in next 2 months pushing it down with everything else (after big boost from FOMC meetings), Tesla will correct down after Q1 earnings. Maybe get as low as $180 to $190 (just looking at 6 month support lines).
It will then go back up to mid $200s (like $240), and oscillate around there until market finally realizes changes in future earnings and it moves out of the channel upwards.
I predict it will break $300 in the summer of 2024.
