Avoid Tesla until the coming shakeout is over. Re-engage in the 140 region for Investing. Any bounce back to 185 is a Reduce
Tesla $Tesla (TSLA.US)$ missed Q1 profit estimates as a series of price cuts aimed at boosting demand impacted margins. Revenue rose 24% to $23.33 billion, while profit excluding some items fell to 85 cents a share, slightly below the 86-cent average estimated by Bloomberg. The company's operating margin reduced to 11.4%, down from 16% in the previous quarter and 19.2% a year ago. Tesla, however, remains confident that its operating margin will stay among the industry's highest.
Despite price reductions, Tesla is on track to deliver about 1.8 million vehicles this year, with Model 3 sedans and Model Y crossovers constituting almost all of the 422,875 vehicles delivered in Q1. The company plans to support long-term growth by constructing a new manufacturing plant in Mexico and a battery factory in Shanghai. We target 140 for a long-term level. However, we believe Tesla will most likely visit 165 in the near term. Any bounce back to 185 is a Reduce.
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