Tesla, Inc. (TSLA) continues to see fluctuating growth, aligning closely in performance with the S&P 500 in early October 2022. Both Tesla and the S&P saw a loss of approximately 12% over the past year. Hedge funds were selling the stock, and Tesla slid on the WhaleWisdom HeatMap to a rank of eighteen from two.
Tesla is a multinational automotive and clean energy company that designs, develops, manufactures, and sells electric vehicles (EVs), energy generation products, and energy storage systems. Tesla has made its mark on the automotive industry, and the market for Tesla’s EVs continues to grow as a larger volume of consumers seek to lower their carbon footprint while also appreciating Tesla’s unique luxury vehicles. The company’s energy generation and storage business, run through its Tesla Energy subsidiary, has grown in 2022 despite market challenges.
Tesla has opened several new factories over the past two years, both nationally in the US and overseas, supporting manufacturing expansion and meeting the demand for its products. New factories in Texas and Germany represent some of the most significant new additions and produce lithium-ion batteries for EVs, among other energy devices. Tesla continues to see increased competition in the EV space. However, its investment in battery technology and overall efficiency continues to give them an advantage. Recent concerns in the news related to Tesla’s primary founder, Elon Musk’s, back-and-forth decisions about buying Twitter, Inc. Some investors have concerns about whether this purchase will require selling more Tesla shares. Over the past year, Tesla has also been negatively impacted by economic and political factors but continues to move forward with production and innovation.
Mixed Results from Hedge Funds and Institutions
Tesla saw mixed results during the 2022 second-quarter activity, and the aggregate 13F shares held by hedge funds decreased to about 165.9 million from 175.2 million, a decrease of approximately 5.3%. Of the hedge funds, 28 created new positions, 188 added, 50 exited, and 117 reduced their stakes. In contrast to hedge funds, institutions were buying. Overall, institutions increased their aggregate holdings by about 3.2% to approximately 1.34 billion from 1.29 billion. The 13F metrics between 2012 and 2022 are a good reflection of Tesla’s ability for growth despite a rocky path of upward mobility.
Favorable Estimates
Analysts estimate that year-over-year increases will bring earnings to $5.86 per share by December 2023, up from December 2022’s predicted $4.31 earnings. Revenue estimates are also encouraging, expecting approximately $85.1 billion by December 2022 and a rise to about $120.0 billion by December 2023.
Analysts React to Missed Expectations
Analyst Ryan Brinkman of JPMorgan Chase & Co. kept an Underweight rating on shares and raised the firm’s price target on Tesla to $153 from $137. Even after Tesla’s third quarter (Q3) vehicle deliveries tracked below consensus estimates, Brinkman maintained his estimates. While Tesla expanded production capacity, some factory locations, such as the Shanghai plant, have continued to face shutdowns and delays related to Coronavirus lockdowns and restrictions. While Tesla has reported record delivery figures, the volume has not met consensus expectations, and there are concerns regarding demand. Oppenheimer & Co. Inc. analyst Colin Rusch acknowledged that the Q3 deliveries did not meet expectations but still advised that Tesla shares are a buy and is optimistic about fourth quarter (Q4) deliveries. Deutsche Bank’s analyst, Emmanuel Rosner, also reported Q3’s deliveries being shy of expectations and lowered his Q3 revenue and earnings forecasts.
Positive Outlook Ahead
While Tesla’s growth has slowed, revenue and earnings predictions through 2023 are encouraging. The company has taken measures to expand its manufacturing capacity and continues to innovate its clean energy solutions and expand its EV portfolio. Demand for Tesla’s products and solutions is likely to gain strength, especially with a long-term shift by consumers to electric vehicles. The stock’s trends suggest the company is still a buy for patient investors.