Wanted: A New Dream To Weave

$TSLA Q3 offers little fundamental joy; the chart may still be bullish.

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Another Narrative Needed, Fast

Tesla's fundamentals are deteriorating quickly.  Revenue growth is down hard, margins are down, ASPs are down, and the product pipeline looks unexciting at best.  You can now buy EVs of at least equal competence from many vendors and with the product range aging there is no particularly compelling reason to buy a Tesla today - hence the series of price cuts the company is having to put through.  We don't see any piecemeal improvements in the auto business as being able to turn around the financials or, indeed, power the stock upwards.  We think the stock needs a new narrative and the question is whether Musk is sufficiently focused or engaged to deliver this.  If you look at Tesla's embedded advantages, the first was its time to market with pureplay high end EVs; the second was its time to market with volume EVs, which consumers everywhere lapped up as a result of the exceptionally strong brand marketing effort achieved by Tesla; and the third is its Supercharger network.  The company has started to provide access to Superchargers to non-Tesla vehicles; perhaps this is the next move up for the stock.  Musk on the earnings call reportedly mentioned that 'Energy' was now their most profitable line of revenue.  Alternatively a whole new narrative is needed and only Musk can credibly come up with that. 

Let’s take a look at the numbers, the stock chart, and our rating.