What on earth’s going on with the Tesla share price?
In a volatile stock market, the Tesla (NASDAQ:TSLA) share price continues to stand out from the crowd. Shares in Elon Muskâs company are down 31% since the start of the year, while the S&P 50‘s down less than 2%.
The share price might be falling, but I donât think the company’s in a worse position than it was at the start of the year. And not just because of the energy business.
Car sales
Car sales probably have something to do with why the stock has been coming down. In February, vehicle deliveries were down 76% in Germany and 50% in China. Thatâs not positive and itâs had to attribute this to a wider slowdown in the industry. Electric vehicle (EV) sales in Germany were up 40% in January, despite Tesla seeing a major decline there.
From my perspective however, this isnât a reason for the shares to be falling so sharply. Itâs been a long time since car sales were a viable investment thesis for the business.
Tesla has a market-cap thatâs more than four times that of Ford, General Motors, Stellantis, and Ferrari combined. Selling enough cars to justify that was always going to be difficult.
Elon
Another source of concern is the companyâs CEO. As a result of his role in the Department of Government Efficiency (DOGE), Musk’s reported to have become disengaged from Tesla. I find this hard to believe. One reason is the fact a lot of the CEOâs personal wealth is tied up in Tesla shares, giving him a strong interest in the company â and its share price.
Another is that overseeing the National Highway Traffic Safety Administration is within DOGEâs remit. And Musk has historically viewed the organisation as an obstacle to Teslaâs progress.
Iâm sceptical of the idea that involvement in DOGE automatically comes at the cost of keeping Teslaâs interests at heart. Â
What matters for Tesla?
As I see it, the investment thesis for Tesla shares comes down to its ability to launch its robotaxi network. Without this, I donât see how the stock can be a viable investment. This is a view that Musk has endorsed in the past and I think itâs still the case. But the main obstacle to this isnât car sales â itâs regulation.
Despite the CEOâs comments earlier in the year, I donât think it would be a big problem if the robotaxi network doesnât launch in August. What matters is that it gets there eventually.
I donât think the odds of Tesla getting regulatory approval for its autonomous vehicle network have become dramatically longer. So Iâm keeping an eye on the share price as it falls.
Patience
Tesla shares might be down 31% in the last couple of months. But a look at where the stock was five years ago (53% lower) goes some way towards putting this in context.
The share price is falling, but I donât think the underlying business is deteriorating. Itâs not yet too cheap for me to ignore, but the equation looks ever more favourable as things continue.
The post What on earth’s going on with the Tesla share price? appeared first on The Motley Fool UK.
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Stephen Wright has positions in General Motors. The Motley Fool UK has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
