Tesla Crashes ... Sort Of

Does Tesla really need massive market share? [View in browser]( [The Juice Logo] Proprietary Data Insights Top Stock Searches This Month Rank Name Searches #1 Tesla 473,147 #2 Apple 366,333 #3 Amazon.com 302,840 #4 Nvidia 300,029 #5 Microsoft 245,467 #ad [Subscriber Exclusive: Free Q3 Report On Top Stocks]( Brought to you by [The Spill]( [Top Stock Picks for Massive Profits]( [The Spill - Top Stock Picks for Massive Profits]( Stop wasting time scouring the internet for stock picks, we do the work for you! Get daily ratings and expert analysis of the most popular stocks and rare finds directly to your inbox when you sign up for The Spill. [Sign up today.]( Tesla Crashes … Sort Of Watching tech stocks lately is about as interesting as it has ever been. That’s saying a lot, given the long standing excitement and market-leading dominance of the sector. In Tuesday’s Juice, [we argued that tech will likely continue to lead the way]( as we return to a decidedly bullish stock market to end 2023 and start 2024: Maybe the strength we see in Apple (it’s up about 8% over the last month) indicates that investors do view it as a safe place to keep capital even amid slow growth, thanks to its profitability, cash position and small, but growing dividend. That’s our take on Apple (AAPL), but what about Tesla (TSLA)? Particularly amid a set of contradictory numbers. - Tesla’s electric vehicle market share dropped in Q3 to 50%. That’s down from 62% in Q1. Call it a crash. But it doesn't really matter, because … Tesla’s stock is up roughly — - 14% over the last one month. - 28% over the six months. - 123% year to date. - 44% over the last year. How can a company with plunging market share have such a killer stock? Probably because the market share number makes for a good headline, especially in a world where Elon Musk routinely plays the villain. However, with some context placed around the headline, it’s clear to see why TSLA stock continues to crush it and the company is — for all intents and purposes — doing as well as ever. In some ways, Tesla is a modern day flight to (relative) “safety” like Apple. Quantitatively — - Yes, Tesla missed on Q3 earnings for the first time since 2019. - However, Q3 sales increased 19.5% annually, compared to industry growth of 16.3%. - Sure, Tesla’s market share keeps slipping, but the company remains dominant. - The next closest competitor is Ford (F) with just 6.7% market share. - More than 25 companies split the 50% of market share Tesla doesn’t control. Qualitatively — If it wasn’t for Tesla, we would not be seeing electric vehicles take on broader appeal: - In Q3, EV sales surpassed 300,000 units for the first time ever in the U.S. - YTD, they are at just over 873,000, well on pace to pass 1,000,000 by November. 2023 will be the first year ever that EV sales in America crossed the one million mark. Tesla doesn’t need to be a market share story. Sort of like Apple. Apple’s share of the U.S. smartphone market has fluctuated between 37% and 46% over the last five years. Depending on who you get your data from, it’s presently around 39%-40%. However, ask anybody the first brand that comes to mind when they think smartphone and we’ll bet you a side of mashed potatoes topped with gravy, it’s iPhone. Same goes for Tesla. There are Tesla EVs and all others. It’s this mindshare that allows everybody else’s — taken together — market share to grow. What Tesla needs — like Apple, really — is a new product. And that’s coming in the form of Tesla’s Cybertruck. Except it won’t happen overnight, as Musk noted on Tesla’s recent Q3 earnings call: But this difficulty going from a prototype to volume production is like 10,000% harder to get to volume production than to make the prototype in the first place. And then it is even harder than that to reach positive cash flow. That is why there have not been new car start-ups that have been successful for 100 years apart from Tesla. So, I just want to temper expectations for Cybertruck. It's a great product, but financially, it will take, I don't know, a year to 18 months before it is a significant positive cash flow contributor. I wish there was some way for that to be different, but that's my best guess. So, really, the demand is off the charts. We have over 1 million people who have reserved the car. So, it's not a demand issue, but we have to make it, and we need to make it at a price that people can afford, insanely difficult things. In conclusion, we continue to focus on ramping production while maintaining positive cash flow, and we continue to target expect to have around 1.8 million vehicle deliveries as stated earlier this year. Tesla has entered territory where investors anticipate it will deliver. All it takes is one look around most big and medium size cities, such as Los Angeles, San Francisco, New York, Austin and Portland. Teslas are everywhere. Just like iPhones. It’s a classic case of not only [invest in what you know](, but put your faith in proven market pioneers who have delivered time and time again. The Bottom Line: There’s something refreshing about actually listening to a Tesla earnings call. Or even an Elon Musk interview. When you hear Musk speak in these situations, his clearheadedness stands distinct from some of his social media tangles and the general consensus much of the public has about the guy. While The Juice certainly takes exception with some of Musk’s antics, we also realize he’s often one step ahead of everybody else. For example, we think Musk has a vision for X (the artist formerly known as Twitter) that’s light years ahead of the easy digs critics are making at the fall of the social media platform. Simply put, don’t be surprised if X turns into a smashing success. But, this too, won’t happen overnight. So it’s double refreshing to hear Musk temper the Cybertruck expectations. In our view, this measured and realistic (even if overly cautious) approach helps calm investor nerves and keep them in the stock, making TSLA a core holding for long-term investors. 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