Tesla Stock in 2019
It seems that every year is a make-it-or-break-it test for Tesla Inc (NASDAQ:TSLA). But with the “Model 3” officially on sale, the Tesla stock news this year is shaping up to be the most monumental for the company yet.
A lot of that has to do with—pardon the pun—the rubber finally meeting the road.
For years, Tesla stock news centered around what could happen with this giant electric car company bent on upending the traditional automotive paradigm. Tesla stock news was always about potential.
In 2019, however, we may finally see Tesla have to sell itself on more than just what the future may hold. In other words, investors may want to see results.
And the year has gotten off to a quick start for the electric car company, with Tesla stock news plastered across the headlines.
Let’s first examine the most recent developments for Tesla stock in 2019.
Why TSLA Stock Dipped Last Week
One of the biggest movements at Tesla came by way of its massive 13% single-day slump to end last week.
The drop came as a result of the company cutting seven percent of its full-time employees as it ramped up production on the Model 3 sedan—the flagship vehicle that Tesla hopes will propel it from being a toy for elites to becoming an everyman’s car. (Source: “The 7 best days for Tesla shorts, and what caused them,” CNBC, January 19, 2019.)
This move came as the company found itself tightening its belt in anticipation of more worldwide releases of its Model 3. For instance, the car will be debuting in Europe.
Chart courtesy of StockCharts.com
The Tesla layoffs were not, of course, what investors wanted to see.
Layoffs can be a tricky business on the stock market. For older legacy companies, layoffs can be seen as an astute and pragmatic move to drive down costs—with a corresponding stock price rise as a reward.
However, for younger companies that pride themselves on rapid growth and expansion, layoffs can be seen as a move in the wrong direction. After all, Tesla is a relatively young automaker; it should be expanding rapidly and growing its production, not slashing it.
Telsa CEO Elon Musk—never one to shy away from headlines—wrote a letter posted on the Tesla web site, detailing the cuts:
…we will need to deliver at least the mid-range Model 3 variant in all markets, as we need to reach more customers who can afford our vehicles…The need for a lower priced variants of Model 3 becomes even greater on July 1, when the US tax credit again drops in half, making our car $1,875 more expensive, and again at the end of the year when it goes away entirely.
(Source: “Company Update,” Tesla Inc, January 18, 2019.)
Basically, while the Model 3 is the most affordable car yet in the company’s fleet, it’s still out of range for many. As such, the company needs to cut back in order to subsidize that deficit in sales expectations.
While a tough pill to swallow, this setback will not permanently cripple Tesla stock and I imagine it was a wise move for the future as Tesla may have to rein in a few expectations as it continues to grow.
All the same, there is still a lot of potential locked away within Tesla stock in 2019 regardless of these early troubles.
Tesla European Expansion
One of those potential-filled appeals of Tesla is the company’s expansion into the European Union (EU).
The Model 3 EU approval has finally been met, meaning that Tesla can finally tap into one of the largest markets on earth.
And the approval came not a moment too soon, as a ship full of Model 3s is reportedly on its way to Belgium and is due to arrive on February 2. (Source: “The Tesla Model 3 is finally approved for European roads,” TechCrunch, January 21, 2019.)
Tesla Q4 2018 Results
The company’s upcoming Tesla Q4 2018 results are likely to have a big impact on the near-future TSLA stock performance, and we’ve been given a teaser of sorts by the company.
The company wrote in a press release that it shipped 1,000 vehicles per day in Q4, setting new company records, with a total of 86,555 produced. (Source: “Tesla Q4 2018 Vehicle Production & Deliveries, Also Announcing $2,000 Price Reduction in US,” Tesla Inc, January 2, 2019.)
Of that number, 61,394 were Model 3 vehicles.
The fourth quarter of 2018 was also a moment of maturity for the company, as it delivered nearly as many cars in 2018 as it has since its inception. This was a natural effect of the introduction of the Model 3, a far more affordable Tesla compared to the other cars in its fleet.
The company also touted its international expansion into Europe and China come February as exciting opportunities moving forward.
A final big move out of the teaser was that the company is going to institute a $2,000 price cut across its line of cars.
The TSLA Q4 2018 date has been set as the end of day February 7, but until then, we can speculate about what’s contained within.
I expect to see strong numbers roll out in this latest quarter. Whether they beat analyst expectations is another matter, but I imagine that they will. With the current lag in the stock price from the job cuts, at any rate, TSLA stock is far cheaper than it’s been in a while and could swell in value if the results come back positive from its latest earnings report.
|Tesla Sales in U.S.||All Models||Market Share|
(Source: “Tesla US Sales,” CarSalesBase.com, last accessed January 23, 2019.)
|Tesla Sales in EU||All Models||Market Share|
(Source: “Tesla European Sales,” CarSalesBase.com, last accessed January 23, 2019.)
The performance of Tesla stock in 2019 is going to be hard to predict. The Tesla stock news has so far been rocky, to say the least, but I have long had faith in this ambitious tech company.
Musk remains—for all the headaches he induces among stockholders—a powerful communicator and strong leader at the helm of a company that does not lack for vision.
Those all tend to be strong qualities that, with the right business plan, could help propel TSLA stock higher as the year progresses.
I have no doubt that many bumps lay on the road ahead, but there’s a very good chance that we’ll see a strong TSLA stock performance in 2019.