Tesla's Growth - Is It Real?
Tesla has taken a hit recently, losing another 9% in value today in its share value and many are wondering if there is demand for Tesla vehicles in the future and if the company is even going to grow anymore. Let's see if this is true.
First off, Tesla just filed permits for more work at Giga Texas. There is construction which will start on Dec. 27, 2022 for a ground up and complete interior finish out of the EV manufacturing facility. The project covers 174,979 square feet and will cost $58 million.
This sounds like growth to me and Tesla is expecting there to be more growth in the future. Otherwise they wouldn't do a project like this. They also wouldn't be heavily ramping Giga Berlin and Giga Texas. Those are two other indicators that Tesla thinks there will be big growth ahead.
Elon Musk sold stock a few weeks ago and Tesla has statements that would have to be different or Elon Musk would not have been able to sell with material information that would tell investors that the company is performing worse than what was told. The trajectory of the company is intact.
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Will Tesla Continue This Growth?
There's also the recent news about Tesla building a new giga factory in Nuevo Leon, Mexico and that this giga factory will most likely be producing the Model 3, the Model Y, and the Model 2 - or compact model.
Tesla also just recently lowered prices for the Model 3 and Model Y by $7,500 as an instant credit. People who take delivery by the end of 2022 will get this discount. Is Tesla doing this because there is a lack of demand?
The Model Y long range was $48,990 in March 2021. It is now $65,990. Even with the discount, it's selling for more than it was back then. The Model Y will still provide great margins for Tesla in 2023.
Most likely there is preparation from Tesla to prepare for the $7,500 tax credit that takes place on January 1st. Tesla will put prices back then and there is a chance that Tesla will actually have a great increase in demand due to the tax credit.
There are pictures of a lot of people in Tesla stores in Fremont, CA, which shows that there is activity and action happening for Tesla. There are people going to stores, service centers, and buying the vehicles online. There are many fears that Elon Musk has taken political sides that hurts the Tesla brand.
Mr. Beast also recently asked if he could be the Twitter of CEO. He is the largest YouTube personality in the world. Elon Musk has said that that isn't out of the question. Marquis Brown who has a top tech and auto YouTube channel has also talked about the Model S Plaid and it being his favorite daily driver.
It would be difficult for these high viewed personalities to associate with Elon Musk and Tesla if they were a toxic brand. Elon Musk is most likely not impacting Tesla in a toxic way. Most of the converns are U.S. driven any way. There are large discounts starting January 1st, 2023, and there doesn't appear to be an impact to that.
Tesla has a trailing P/E of about 39.8 and a forward P/E of about 17. This is crazy for a company growing and expected to grow at 50% or more every year. Is this a fair value?
For more information, see this video from Farzad Mesbahi:
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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.