2. Tesla Inc (NASDAQ:TSLA)
Number of Hedge Funds Investors: 99
Jim Cramer in a latest program on CNBC said he checked with famous chartist Larry Williams about the valuation of Tesla Inc (NASDAQ:TSLA) and forecasting the stock’s future. According to Cramer, Larry believes Tesla is nearing its bottom.
“We’re going off the charts with Larry Williams. He’s the legendary technician and market historian who’s been the best in the business since before I learned how to draw. He’s written over a dozen books, created a ton of proprietary technical indicators, and most importantly, he’s got a stunning track record, especially over the past 5 years. I revere him, always have. Larry’s the one who called the COVID bottom, for instance, in April 2020, back when just about everyone was terrified that we’d be stuck in a prolonged government-mandated recession. And you know what he’s doing tonight? He’s calling the bottom in Tesla. Larry loves to look at how stocks tend to trade over the course of the year. He goes over the history, then finds the seasonal pattern, and it plays out time after time. The true seasonal pattern in blue shows that Tesla typically begins rallying at this time of the year. Sure enough, the stock’s already going up, so I’ve got to tell you, I’m with that. Now, Larry also likes to hunt for cycles that seem to be repeating themselves beyond the annual seasonal cycle. He’ll identify a bunch of these, then combine them together into a wave that predicts where the stock is likely headed. So, here’s what Tesla looks like with this cycle forecast attached to it. The forecast is blue on the way up, gray on the way down. Right now, it suggests that Tesla should be ready to rally—maybe furiously—with a pullback creating another buying opportunity around mid-June. Larry notes that we’ve seen this wave in Tesla stock numerous times before. Historically, stocks rallied 80% of the time during this time period. I think that’s pretty good odds. So, if you believe Larry Williams—and he’s earned a lot of credibility over the years—then this is a “gentleman starter” electric engines moment for Tesla. Assuming he’s right, the stock’s rebound of the past couple of days is just the beginning of a huge move. And I’ve got to tell you, all aboard, I’m with Larry.”
Analysts are looking beyond Elon Musk’s big claims and digesting the harsh reality facing the company. Tesla’s sales are falling all over the world despite the broader industry growth. For example, in California, the largest U.S. market for electric vehicle adoption and sales, Tesla sales fell about 12% year over year in 2024, causing its market share to drop from 60.1% in 2023 to 52.5% in 2024. Was it because Californians are buying fewer EVs? No. Californians purchased more than 2 million electric cars during the year, almost double when compared to the past two years.
Things aren’t looking good for Tesla in Europe, too. For example, in Germany, Tesla delivered just 1,429 new cars in February, down 76% from the same month last year. In contrast, battery-electric vehicle (BEV) registrations surged 30.8% during the month.
Tesla Inc’s (NASDAQ:TSLA) product lineup is showing signs of stagnation, with over 95% of sales still coming from the Model 3 and Model Y. Meanwhile, competitors are rolling out more advanced models. According to Reuters, Tesla’s market share in Europe is slipping as legacy automakers like BMW post stronger sales. Chinese competitor BYD is also gaining ground in Europe, despite talk of tariffs.
Polen Focus Growth Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q4 2024 investor letter:
“The largest relative detractors in the quarter were Tesla, Inc. (NASDAQ:TSLA) (not owned), Thermo Fisher Scientific, and Broadcom (not owned). We’ve spoken at length about our rationale for not owning Tesla. The stock enjoyed a 54% return during the quarter, with effectively all of the share price performance strength coming in the post-election period, as the market expressed a positive view on Elon Musk’s prominent role in the incoming Trump administration and its potential implications for Tesla. While we agree this development should be a net positive for Tesla and recognize the company’s interesting future prospects for autonomous driving and humanoid robots, its current valuation demands that shareholders pay primarily for potential innovations that have yet to materialize, with uncertain risks and timelines, presenting a different type of risk profile than we are comfortable with. Today, Tesla is an automobile manufacturer limited to the higher-income segment and is increasingly challenged to sell vehicles when interest rates are not zero. As such, we continue to question the company’s long-term growth profile, its ability to scale a large robotaxi service (which seems to be the source of euphoria in Tesla shares), and its corporate governance.”
