Why Tesla is not giving up on uncertain times

Table of Contents

The global economic outlook is going through worrying situations. Several specialists are even forecasting a recession for the year 2023. These factors have had a negative impact worldwide and not even the main companies have been able to save themselves. Tesla, the leader in the electric vehicle market, has felt the impact of these problems as well.

In the middle of uncertainty

The company led by the billionaire, Elon Musk, is facing situations in the market like never before. Its shares have plummeted 64% from their peak just over a year ago.

This is the first time the declines have been this steep for the American company; the last time such a steep drop was seen was during the early days of COVID-19 in early 2020, when most investors were desperate to sell. However, even back then, the stock’s drop did not reach that of now because it was 60.6%.

During this month alone, Tesla has lost almost a quarter of its value. Several specialists say that in addition to the global context, the acquisition of Twitter by Elon Musk is another trigger for the company’s problems.

That story had several twists and turns and generated a lot of controversies; among that stands out that Musk sold Tesla shares worth almost 40 billion dollars to take over Twitter. These negotiations could have a negative impact on Tesla in the future if it does not manage to recover from the bad times it is going through. 

All is not lost for Tesla

But it is not all bad news for the EV manufacturer. Despite the sharp drop in its shares and all the current problems in the global economy, Tesla can still be considered a good investment option.

Even though there are so many drawbacks, the US company had an outstanding quarter. Its revenue soared 56%, operating profit broke records and free cash flow increased an incredible 148% to $3.3 billion.

On top of that, Tesla’s cash position grew to $21.1 billion.

It may sound strange, but it’s true. Tesla achieved these super results because the company delivered more than 343,830 cars during the third quarter alone, delivering a 42% year-over-year increase.

Looking forward to the future

By now it is more than clear that if a company can do well in the face of any problem, it is Tesla. It has demonstrated time and time again its spectacular ability to perform effectively and turn situations that are stacked against it.

The company speculates that full-year production will grow 50% versus 2021, and Elon Musk assures that order levels will remain high during the fourth quarter.

Despite the increasing demand for Tesla’s vehicles, the growth it had in energy storage products is even more impressive. Tesla deployed a record 1,100 megawatt-hours of energy storage to serve its customers with its energy storage solutions; which was an increase of 62% year-on-year.

In order to match the demand for these products, the company increased production at its California factory and this positive trend will not slow down anytime soon. 

Is Tesla a good stock to buy?

In the face of so much economic uncertainty, Tesla was boosted by the growing demand for its vehicles over the past year.

Investing in the automaker would mean solid returns over a sustained period thanks to the company’s innovative technology and manufacturing expertise; however, it is always necessary to take into account the context and analyze whether the recent stock drop will have a stronger impact than expected.

Wall Street specialists give a “Moderate Buy” rating for Tesla stock. The average target price is $298.96, which implies a potential upside of 89.2%. Analysts’ target prices range from a low of $85 per share to a high of $760 per share.

Taking all this into account, what do you think about the ride Tesla has been going through? Does it seem like a good option to invest in?

Make sure to stay up to date with the latest news of the financial world with our NewsFlight newsletter.

(Information in this post is for general informational purposes only. It cannot and should not be considered as suggestions or recommendations regarding investing or financial decisions.)

Ready to start investing?

Invest in stocks, ETFs, and complex products from US and global exchanges, all commission-free. Start with as little as €5!

Financial news and market insights

Recommended articles

Invest in what really matters to you

Whether it’s renewable energy or the latest IT giant,
invest in it with no commissions on FlexInvest.