More and More People Are Getting Nervous About Tesla

People Getting Nervous About Tesla

I'm seeing more and more people get nervous about Tesla lately. There's talk about Tesla being in trouble and that the company is in for a rough ride for the next 1 to 2 years. Here are some things people are saying:

For the first time ever, I’m getting a little concerned about Tesla.— Mayur Thaker (@freshjiva) May 1, 2023

Mayur Thaker is said to have 1,500 long Tesla shares and 500 that he trades in the short term. His concern is that Tesla isn't going to make money this year, and has lowered his earnings per share estimates by about $2.00 for the year. He may be right as Tesla continues to lower prices in a recession environment.

There are two other people who were once rooting highly for Tesla, but have become critical, and I think the reason is the depressed stock price and the lowering of prices. If Tesla instead advertises and drives sales without lowering prices, they believe Tesla will make more money in the short term. If Tesla can do that, why would they lower prices? Here's what they have to say:

Advertising drives long term demand as non-EV users are convinced to go EV. Affordability increases $TSLA demand once the $25K EV is ready. Cutting price of M-Y by another $2K does not enhance affordability. As Elon conceded on the 1Q CC, TSLA price cuts are needed to clear… https://t.co/Wce9GiqeWX— Gary Black (@garyblack00) April 30, 2023

Gary is clearly saying that he believes price cuts aren't needed right now for the higher end Tesla vehicles - EV education and advertising is needed. He believes that once Tesla hits the $25,000 EV, that advertising won't matter as much. He's right to some degree.

I think that Tesla should still lower the prices of its existing vehicles to enable affordability, even if it means some short term pain. It's all about getting cars on the road as fast as possible and at as low a price as possible.

"They're taking shareholder value and giving it away to the new buyers of Tesla's who are getting the deal of a lifetime," says @GerberKawasaki on $TSLA price cuts. pic.twitter.com/9Yhipn3Fru— Last Call (@LastCallCNBC) April 26, 2023

According to Ross, Tesla is taking away shareholder value and giving it to new buyers, who are getting the deal of a lifetime. The value of an EV - especially a Tesla EV, has never been better. Tesla is going to have lower earnings due to continued price cuts. Ross is puzzled that Tesla hasn't sold every single EV it has produced.

The reason these 3 people are becoming more critical of Tesla is because Tesla is doing things that, in the short term, are going to hurt the stock price. They are absolutely correct in that assessment. In the short term, Tesla is not going to make as much money as they have in the past.

I also think that Ross and Gary don't believe in FSD like some of the other Tesla investors. I personally believe in FSD and think that one day, every Tesla will be able to drive itself or make someone some passive income as a Robotaxi. This will be a huge day for owners of a Tesla and shareholders.

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• How regenerative braking works in EVs.
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• Tesla's Megafactory - Capable of producing 10,000 Megapacks per year.

Why They Are Getting Nervous

On the flip side, you have people who have many shares of Tesla who believe that Tesla is doing the right thing by lowering prices. I am in this camp and own some shares of Tesla too. I don't need my shares right now, and don't plan on selling until the EV and Robotaxi market is saturated and Tesla has reached a multi-trillion dollar valuation. It's possible Tesla never reaches that point and if that is so, at least I invested and took a chance.

The real-world, unbiased results of $TSLA price cuts on typical consumers "the price cuts on the Model Y made it a no brainer""the Ford isn't worth what they're asking vs. the Y""it's hard to justify buying a non-Tesla EV" pic.twitter.com/HzdMJsVf6O— Dillon Loomis (@DillonLoomis22) May 1, 2023

You can find information that supports these two arguments for Tesla:

* Tesla should advertise to drive those who aren't sure about an EV as buyers of Tesla vehicles
* Tesla should cut prices to sell all of its vehicles and to increase the market size that can afford a Tesla

Each of these is a correct choice. There most certainly is a way that Tesla could spend money on advertising that would help convince people to buy a Tesla - but it would have to be targeted at people who can afford an EV. I'm not sure how they would know to target only those who can afford a Tesla.

This is one of the most divisional debates going on among the Tesla community and is causing what appears to be a lot of tension. If I were a fund manager and I was managing people's money, and they had a lot of Tesla stock, and it was going down like it is, then I could see how fund managers like Gary and Ross would be concerned. I think that is why Gary sold his Tesla north of $180 because Tesla most likely won't get above that in the next 6 months to a year.

On the other hand, I think Tesla needs to make their vehicles affordable to the world and decrease the cost of transportation. It's getting harder and harder for the average consumer to afford a car, and there needs to be low-priced vehicles and Robotaxi options that are well below current Uber costs.

The world is great and easy for someone who has a lot of money, but for the average person who has to think carefully about where their dollars go, it's still difficult to afford even a Model 3 RWD.

What do you think Tesla should do? Should they advertise or keep lowering prices?

In Related News: Elon Musk Gives Nod to Model 3 - Project Highland

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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.

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