Whenever I invest in a particular stock, I conduct a realistic analysis on the underlying business in terms of future revenue growth, competition, scalability, management, and potential future cash flows.
In this report, I will discuss Tesla (NASDAQ: TSLA) in-depth to help newcomers understand why I'm so bullish on Tesla stock in the long run.
Be sure to share this article with your friends, family, and colleagues if you find it help.
This report includes my reasoning for owning Tesla stock as well as links to impoxrtant resources & articles that will help you make your own financial decisions.
Disclaimer: I am not a certified financial advistor. This article is for entertainment purposes only. Only invest money you can afford to lose and don't buy any stock until you understand the company inside and out.
The Beginning of Tesla' Bullish Run
Back in March 2020, I posted several videos on my Youtube channel talking about why Tesla stock was so undervalued.
Tesla CEO and founder Elon Musk spent years working his butt off to get Tesla where it is today.
THe company was unprofitable for years until Tesla began finishing in the black due to selling EV tax credits to legacy ICE automakers like Ford and GM.
Once Tesla became profitable, investors & traders starting buying up TSLA stock like crazy and TSLA stock gained over 700% in 2020 alone.
Tesla performed a 5 to 1 stock split and gained inclusion into the presigiious S&P 500.
However, things haven't gone great for Tesla so far during 2021.
The EV stock bubble has begun to burst and rising interest rates forced a lot of investors to chase the safety of bond yields and lock in their 2020 gains.
A global EV chip shortage and Tesla recalls in China have caused Tesla shares to crash in the beginning of 2021.
Even long term Tesla bulls have sold shares to protect their clients assets.
The good news is I believe Tesla will turn things around fairly quickly.
While Wall Street becomes fearful of Tesla's declining share price, I feel like this is a golden opportunity for investors to pick up Tesla shares at a nice discount.
I like buying my favorite stocks at a discount. I welcome lower stock prices in the short term as long as the underlying fundamentals of the business remain unchanged.
Let's take a deep dive into Tesla stock and see what we can uncover.
Tesla's Business Model
Tesla is a diversified energy company that sells EVs, solar roofs, and solar panels.
The company went public in 2010 and has been one of the best performing stocks on the last decade
TTM Revenue is $31 billion with impressive quarterly revenue growth of 45% YoY.
While Tesla operates slim profit margins of just over 2%, I expect those margins to improve as battery technology gets cheaper over time.
Tesla is currently losing money selling cars but remains profitable due to EV tax credit sales.
Many Tesla bears point to this major flaw in the business model and think the stock is overvalued.
I will agree that Tesla trades at a high P/E ratio but that hasn't stopped other big tech companies in the past.
Refer to my previous article on why Tesla stock isn't overvalued for a more in-depth analysis.
Basically, Tesla is a growth company and it's just in the beginning of its long term clean energy journey.
Tesla sold just under 500,000 cars in 2020 but plans to sell 20 million EVs by 2030.
Investors own Tesla stock to profit from its future growth not where the company is currently valued.
In this day and age, slow growing companies like GE and T cannot keep up with monetary inflational practices.
Smart investors have embraced hyper growth stocks like Tesla to protect their future purchasing power.
Ah, let's talk about Tesla's deliveries. I mentioned earlier that Tesla delivered just under 500,000 EVs in 2020.
Tesla only makes up 1% of the global EV market but I expect that number to increase regardless of growing competition in the EV space.
Tesla maintains a strong brand and is the best selling EV in both the United States and China.
The Tesla Model 3 is considered the “cream of the crop” when it comes to electric cars.
However, there have been some short term headwinds in 2021 that could slow down deliveries.
The global chp shortage has effected most EV makers and we aren't sure when the problem will be solved.
Another way to look at this problem is that the demand of EVs is so high that there aren't enough chips to keep up with demand.
This proves EV sales will boom in 2021 and Tesla is well positioned to benefit from a change in customer taste.
Last year, Elon Musk unvelied the Tesla Cybertruck and the Cybertruck has already received hundreds of thousnads of reservations.
Now, Cybertruck production will begin in 2022 and we won't see any revenue from these sales until next year.
Tesla hinted at a Tesla semi truck to complete with Nikola Motors and Hyllion, too.
On average, Tesla releases around 1 vehicle per year and these new EVs will help push sales towards the 20 million EV mark.
Tesla continues to innovate at a rapid pace while its competitors play catchup.
Just when people counted out Tesla as an overvalued car maker, Elon Musk and his employees are planning not only innovative products but complete global domination.
EV Growth in India & China
Tesla's Shanghai factory will hit a max output of 400,000 EVs in the near future to help retain its market share in China.
Recently, Tesla has been dealing with quality issues in China because Chinese customers filed complaints about battery fires and other quality issues.
This could hurt Tesla's growth in China but I expect these problems to be addressed fairly quickly.
India is another exciting EV market for Tesla and they partnered with leading Indian car makers to produce Tesla vehicles there.
It's not clear whether Tesla will build a factory in India but the company set up a corporate office to help drive sales throughout the country.
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Solar Energy Business
The Elon Musk Effect