Despite the monster jump, Tesla will still fall 25% in 2024, will they buy stocks?

The day after the latest financial results were announced, Tesla's stock price soared more than 10%. However, stock prices have remained unchanged since the beginning of 2024Decrease of 25% or moreDoing it.

So will this pop be the beginning of a new bull market for Tesla? Or is it just an overreaction?

When analyzing Tesla, the first thing that can be cited as a fact is that stock prices are not traded only based on current business conditions. Instead, emphasis is placed on Tesla's future projects and product launches.

This is evident when looking at the company's first quarter results, but it wasn't great.

Sales decreased by 9% compared to the same period last year, and gross profit margin decreased from 19.3% to 17.4%. Since Tesla's gross profit once stood out from other automobile manufacturers, this continues to be a worrying trend. Now, it's on par with others.

The decline in sales and the reduction in profit margins weighed heavily on Tesla's earnings per share (EPS), falling 53% from the same period last year to 0.34 dollars. Perhaps the most worrying indicator is that Tesla's free cash flow has fallen into negative territory, which means Tesla is currently spending cash to function as a business.

This is all troublesome for investors, but after seeing the latest information on the conference call, many investors quickly began to ignore these negative results.

Tesla investors were envisioning an all-electric vehicle fleet with Tesla as the dominant player in this field. New technologies such as automatic taxis and semi-trucks are also included in this vision, but at the moment these are just ideas on the desk.

However, investors sought to consider either of these technologies within a few months.

In August,cybercabTesla's calledRobo-taxiwill be shown for the first time in the world. Tesla's current valuation is likely to include the acquisition of a transportation market for people and goods, so much depends on this release.

Tesla also suggested that it would update its product launch roadmap. Tesla previously anticipated that these new models would appear in the latter half of 2025, but now they expect it to be in the first half of 2025 and even the second half of this year. The new vehicle will include a “more affordable model” that many investors have been waiting for. If Tesla can mass produce electric cars at low cost, there may be an increase in the number of drivers who buy electric cars suitable only for short-distance commuting rather than long-distance travel.

Investors' visions of what will happen to Tesla are being formed, and more information will be available by this time next year. However, Tesla's business situation is a bit troublesome.

So, should I buy it?

If you're a Tesla believer, you can only say “yes.” Tesla's vision is so impressive that it's not a bad thing to be a believer. However, if the world hesitates further about moving to fully electric vehicles, even if all new product launches are successful, this vision may not have the financial resources to support Tesla's evaluation.