Tesla OK or Continue?

First, let's look at Tesla's current situation. Tesla's current total market value is 598 billion. At its peak, it was worth $1 trillion. There are those who say that we should remove Tesla from the Magnificent 7 list due to the sharp decline, and there are those who say that the famous Nvidia, Amazon and Tesla should not be included in the Magnificent 7 anymore. I agree, there is a serious decrease in value. I can't be angry with those who think not to see it there. Most of the decline has come since the beginning of this year. It fell 24.3%. When we look at one year, we can say that Tesla stock remains where it stands. In fact, it has been the same for 2 years. But when we look at 5 years, it's an 800% return. When we look at 10 years, the return is 1411%. When we look at the maximum, the total return has reached 16000%.
So what is Tesla's problem? Tesla fell very hard after the earnings report. It decreased from 206 - 207 dollars to 190 dollars. Now it oscillates between 180 - 190. However, last year, on December 28, that is, towards the end of the year, it had pushed $ 264. It was a very important trend for us and it managed to stay above the falling trend for about 4 minutes that day. But of course 4 minutes is not enough. At least 4 hours were required. When it could not break that trend, a sharp downward slope began great news.
Remember, at that time, the stock markets actually fell sharply from December 28 to the end of the first week of the year. Tesla also got carried away with them. Later, the decline became sharper along with the balance sheet. When Tesla was around 240 dollars, I thought we could see 325 at the end of the year when we looked technically. Because I was saying we would break the 264 level. We really pushed, but we didn't break and came down. But it was a technical target. Now let's look at the basic goals.
What does the future of Tesla look like? The main reason why Tesla fell sharply after this balance sheet is not the balance sheet itself. In other words, there is no situation or disaster on the balance sheet that we did not anticipate. The main reason is that Elon Musk said that we will not provide predictions from now on. What does it mean? The CEOs of these Wall Street-traded companies announce their predictions for the next quarter and the next year after their financial statements. There are those who do not do this. For example, Apple's CEO Tim Cook hasn't been doing this for years. But Tesla came up with this and Elon Musk always presented very ambitious goals here. He used to say, for example, that we will grow by 50% annually on average. The fact that he cut that forecast angered Wall Street.
Because Wall Street says, Tesla, you are a very expensive stock. I agree with you on this matter. You need to give us a reason to rationalize this high price. So how will your growth go? How will your profitability go? Look, you've been cutting prices for a while now. Therefore, there was a serious decline in operating profits. Will this come back? Will you continue to undercut prices this year? How are things going with new projects? They said you need to provide us with data on these issues. But Elon Musk did not submit it and the stock market punished it harshly. This is actually one of the reasons why I'm back to bullish on Tesla.
Because eliminating these expectations is actually generally beneficial for stocks in the long run. Because Elon Musk is no longer bound to a promise. For example, if he attributed this to a 50% increase in turnover or quantity, he had to constantly cut prices. There is no such obligation now. Because he doesn't have a goal that he's committed to this year. Therefore, I think he can act more freely and be more comfortable in implementing the strategies in his mind. That's why on the balance sheet that day, yes, there were numbers slightly lower than expected, but that was not the point. Elon Musk said, "I will no longer provide predictions." This may have angered Wall Street, but I think it will work in my favor in the long run. I think it will work in the stock's favor.
Because if there is no expectation, your probability of moving upwards automatically increases as you bring good results. The second issue was that the relationship between Tesla and Elon Musk became clear that day. You may remember this tweet from Elon Musk. My control dropped below 25%. He was saying, "I may not want to expand artificial intelligence and autonomous driving here." However, in his speech after this balance sheet, he said that there was no problem between them and the board of directors and that they could resolve it somehow, and Elon Musk was extremely motivated that day. Yes, he did not discuss balance sheet predictions and figures, but where is technology going and what products are coming. I saw Elon Musk very positively about what they are doing on these issues. So Tesla does not offer any predictions anymore. I think this is a good thing. Secondly, I think Elon Musk is trying to overcome the problems with the Tesla board of directors, and later there was another interesting development in this regard.
In another matter that makes me bullish on Tesla again, I like this balance sheet. Yes, the balance sheet failed to meet some targets, but the overall balance sheet is quite positive. When I looked at seekingalpha.com, the company actually exceeded the expected earnings per share by $1.66. But there is a tax advantage in this. So there's a little bit of a story about accounting. When we subtracted that number, it was slightly below the targets. In terms of turnover, it was around 596 million dollars below expectations. So, with a turnover of $25.17 billion, this is not a big deal. But of course, there are issues that will pull the shares back. But the main problem was not from this, but from Elon Musk's failure to set goals.
But the interesting thing is that when I look at Tesla's balance sheet in detail, I see many positive developments. The most important of these is what is happening with gross profit margins. What were you most afraid of when entering the balance sheet period? Tesla is constantly lowering prices. He wonders if the profits are going backwards. However, on the automotive side, we see that the profit margin is turning upwards. It's a miracle. Because, on the one hand, the company reduces vehicle prices, but on the other hand, it can increase its gross profit from automobiles. It has increased from 18.7 to 18.9. When we look at it as a percentage, it's amazing.
This is because Tesla is improving their efficiency on the production side. Tesla can now produce its cars more economically at around $3200 - $3300 per vehicle compared to the same quarter a year ago. This is a great topic. In other words, while Tesla was suffering from high interest rates and constantly reducing vehicle prices throughout 2023, it actually achieved a big story and radically reduced production costs. In this way, Tesla continued to reduce prices in the last quarter. He managed to increase his profit margin. There are slight decreases in profit margins on the service side and energy side. But these are factors that have a small share in Tesla's total turnover.
The most important issue is the automobile side. Things have turned positive here. Turnover continues to grow compared to last year. Another thing that I like very much is that operating income has also increased. 2.06 in this quarter, 1.76 in the previous quarter, we did not expect these. We were expecting a serious deterioration in these, both in gross profit and main operating profit. Tesla has achieved an upward move in both of these.
Another issue that pleases me very much is free cash flows. While it was 849 million in the previous quarter, they increased it again to 2 billion dollars in this quarter. So they said the profit margin is decreasing, no, it is not decreasing, it is increasing, albeit slightly. They said that the main operating profit is decreasing, no, it is not decreasing, it is increasing. They said that as a result of all this, cash flow would deteriorate. No, they manage to increase cash flow without making much concessions on capital expenditures. 2.46 billion dollars in the previous quarter, 2.31 billion dollars in this quarter. In other words, he continues to spend money, establish factories, and invest. But despite this, cash flow is growing. As a result, we see a strong climb in cash and working capital.
It currently has $30 billion in cash. Again, when we look at working capital, it has reached 20 billion. Serious climbing continues. So when I read these charts, I see that Elon Musk is preparing the company for a war. Tesla is the only company in the world that makes a profit by producing electric vehicles. The Chinese do not make a profit either. bdn's profits come from its hybrids and fossil fuels. All other companies make losses from electricity. Tesla is still able to increase its gross profit here, while also accumulating working capital and cash.
I feel a great preparation for war. If you look, there is a similar situation in the balance sheet. We see growth in assets. Net capital continues to grow rapidly. No other automobile company has such a strong balance sheet. That's why I don't really have a problem with the balance sheet. So, if you ask why our value is decreasing, our price earnings ratio is going backwards. While everything was crazy in 2020 - 2021, Tesla's price earnings ratio reached 969 at one point. Now it is 52. However, although 52 seems to have dropped significantly, it is still very high. If you see it as an automobile company, it's high. This is where the contradiction between analysts and me, or between analysts and Tesla investors, comes from.
tipranks.com , there are 34 Wall Street ratings for Tesla. 12 of them give or take. 16 of them give tutus. 6 of them are selling. They see here that Tesla's price will go to $220. Frankly, it doesn't mean much to me on average. Because the mathematical average of all of them is taken. Some people see Tesla's price at $23. Do you know who this is? Someone who says we should consider Tesla as an automobile company is Gordon Johnson. This is a charlatan though, but okay. This says Tesla is the automobile company. Since Tesla is an automobile company, it should be treated like an automobile company. He says that if we consider Tesla as an automobile company, its multipliers are extremely high. For example, the forward price gain is 65 in Tesla, 9.74 in Toyota, 4.96 in Mercedes, 3.32 in STLA, 2.59 in Volkswagen, 9.38 in Ford. So let's take the average of these as 5. Tesla's 65 is 12, 13 times more expensive than it should be in this case, says Gordon Johnson.
Now, this is a subject that is extremely open to discussion, and I agree with Gordon Johnson if Elon Musk leaves Tesla. So maybe it won't be 5, the multiplier will be 10. But our chances of going down 5-6 floors from here really increase. Therefore, this is still where the debate breaks down, and the more Elon Musk says negative things about Tesla on Twitter, and the more Tesla does not develop at the desired pace in products such as autonomous driving and robot technology, or at least the more Wall Street thinks, the more he sees Tesla as an automobile company. The probability of evaluation increases. But despite this, tipranks' analysts predict an average price of $220. This means an increase of around 17% from today. The highest number of views is 345. There are those who saw the lowest price at 23 dollars. This is how Tesla's current valuation is formed.
One of the reasons why I'm bullish about Tesla again is that the declines experienced by Tesla are not unique to it. Similar declines are experienced in the entire electric car market. The name of the largest electric car ETFs is Cars, abbreviated as Cars, and it has risen from 26 dollars to 21 dollars since the beginning of the year. The decline in Tesla is also around 24%. We see a similar decline here as well. Tesla has a few more unique issues. But overall the market is going down.
There are two reasons for this. One of them is the famous troublemaker, the FED still hasn't reduced interest rates. Powell also said that we will not reduce interest rates in March. He made some statements such as we can drop it three times at most. This really affects electric vehicle sales. Because it puts pressure on you. The second issue is that there is a strange belief in the world that electric car sales are falling. This belief is so intense that, for example, when you go and search "Have EV Sales Slowed" on Google, many headlines show us why electric vehicle sales are falling.
However, there is actually no decrease in electric vehicle sales. There are two reasons for this perception. One is that there is some slowdown in the growth of electric vehicle sales. But again, the numbers are still very impressive. Secondly, there are comments coming from an article published by the garbage called Wall Street Journal, which has really turned into garbage. In the article, the Wall Street Journal goes to car dealers in America and they say that electric vehicle sales are not going well. Then the Wall Street Journal leaves Tesla out of the picture, proving how much other companies' electric car sales have fallen. However, Tesla already has almost a 60% share in the electric car market in America and things progress from there.
The second issue is this is a more serious issue. Since Europe has failed to produce electric cars, they are still at least within a reasonable range at a reasonable cost. Europe is at war against China because China is so good at this. For example, in many countries such as Germany and England, the incentives given to electric cars have been seriously reduced. This is a more realistic issue, but the main market for electric car sales is not Europe anyway, and the real market continues to increase in sales in China. As a matter of fact, when we look at the total figures, there is no problem.
Again, a news article published in Reuters and a report by Rho Motion says that there is no problem, friend. He says that we foresee a growth of 25% to 30% in the sales of electric vehicles in 2024. In 2022, this was 60%, but it's fair to say, do some math. Electric vehicle sales before 2022 are already very low. 60% growth is normal there. Now growth is coming on top of a big number and there still seems to be 30% growth. This is much higher than total fossil fuel vehicle sales. In Europe and many other places, diesel prices are going negative. Gasoline vehicles either remain stationary or move backwards. That market is moving towards electric vehicles. So this is actually a rumor, PS bullshit.
Electric vehicle sales are extremely strong. The reason is obvious: electric vehicles are better cars. Wow, do these batteries wear out? Oh no, these vehicles are already given 8-year warranties, and so far Tesla, for example the oldest one, has had very few battery problems. So there are a few news that hit the press. Apart from that, people can easily use their batteries for up to 1 million miles for 8-10 years, with losses of 20-25%. Moreover, these batteries will be recycled etc. There is no such problem.
The second issue is Range. There is no such thing as range, actually that problem is not that much. Because existing electric cars already offer a range of 300 km, 400 km, 500 km. Our daily usage is around 100 - 150 km if you are going long distance. The number of charges needs to be increased on long trips. It's that simple. In fact, they are all issues to be solved, but these days, the fossil fuel car manufacturers' lobby and the oil lobby are feeding the press in such a way that conspiracy theorists are trying to convince the consumer that electric cars are the enemy of the world. But these are always temporary issues.
Because the bottom line is this; In the United States, Teslas currently outsell Toyota Corollas. The world's best-selling car, Tesla model Y, I can tell you all about them, number by number. I won't bother too much now. There is no shrinkage in electric vehicle sales. There is a proportional slowdown in their growth. This is the unique secret of mathematics. As the numbers grow, it is obviously difficult to keep the growth rate at the same level.
Another issue regarding Tesla is, of course, that Elon Musk's fight with the American state, or rather with the democrats, does not benefit Tesla at all. They are under constant attack. For example, things are happening that the general press, which is democratic, most of the press in America, for example, says that 2.2 million vehicles will be recalled by Tesla. Do you know what this is? A slight enlargement of a warning light on the Tesla's display. This is a software update. Tesla's software update went out and this problem was solved. But look what choice they made in the news. 2.2 million Teslas are being recalled. He also included a picture of a worn-out Tesla in the news. They are constantly trying to give a message to the subconscious about sinking Tesla.
The fight between the Democrats and Tesla, or rather Elon Musk, has gone so far that a court ruled that the bonus given to Elon Musk was, let me put it that way, because Elon Musk does not receive a salary from the company. He received a large bonus when the stock value exceeded a certain target. Over $50 billion. He canceled it retroactively. This is a decision made in 2018 and I am one of the people who voted in that vote. It was asked to the general assembly and Elon Musk said, "I will increase the value of the company to over 500 - 600 billion dollars." In other words, he predicted a growth of 11-12 times. He said, "If I get it out, I want this money too." So we gave.
Now a creature with 9, only 9 shares goes and applies to a court. The majority of Harvard students who support Biden, a Harvard graduate who is the president of the court, are democrats anyway. The former boss of a law firm that supports Biden financially is an openly Biden supporter, and this judge lady, with her 200-page justification, says that the bonus that Elon Musk received due to the lawsuit filed by these 9 people who own stocks is invalid and you must pay it back.
Of course, Tesla has many solutions to this issue. Maybe they can go to a higher court. I just mentioned. Elon Musk uses this as an excuse. We will put a vote before us again and increase the stock share to above 25% again. This may even end positively. But I want you to understand how aggressive they are. A judge can cancel an issue that has been accepted with 80% of the votes due to the application of a creature with only 9 shares. This issue has become so politicized.
Fortunately, it is very likely that Biden and his democrats will lead America this November. That could also be positive for Tesla. But as you know, Elon Musk's political struggle is about immigrants, he fights a lot. It reveals that Biden allows immigrants in America, including illegal immigrants, because he sees them as a vote base for himself. Constant fighting and noise. This is not good for Tesla either. Now, when we put all this together, I see it like this.
Tesla's price could go lower from here. So, frankly, I wouldn't be surprised if it went down to $150. But if you still believe that Tesla is a technology company and believe that Elon Musk will eventually advance this company rapidly in areas such as robot taxis, autonomous driving, $25,000 vehicle robots, you should stay in Tesla and continue to collect Tesla. We have a great window of opportunity before us.
Frankly, I do not think that the stock will go up so suddenly in 2024. It may move up, it may move down, it doesn't matter, but as long as it stays somewhere between $ 150 and $ 200, I am in favor of continuing to collect. I declared 2024 as the year of Tesla collection. If we can get through 2024 safely, bright years await. But this is a very subjective view, I want you to think like this. Because I believe that Elon Musk will return and finish these things. I have bet on Elon Musk in the past and I have always made a profit from these deals. I think I will be able to do it this time too.
Plus, I think Republicans will come to power in America in the elections. I believe this will pave the way for Elon Musk. Because Elon Musk has clearly turned into a republican. I think these ridiculous rumors about the electric car market will disappear. Electric cars are better vehicles, more efficient vehicles. I think there will be a great return for them and no matter what happens, interest rates in America will definitely fall this year. I don't know if it will fall 3 times or 6 times. But it will fall anyway, which is positive for Tesla. Putting all this together, I continue to invest in Tesla. I don't have great expectations from 2024 either. We are preparing for 2025 and 2026. And remember, stocks are bought in such a state. Good companies are bought when they fall. I'm not saying don't place a stop loss. I'm not saying Tesla won't go lower. But good stocks are bought when they are low. When good companies fail, they present us with opportunity. If you believe that Tesla is a good company, that electric cars will come back, that Elon Musk will be able to achieve autonomous driving, etc., it would be beneficial to collect Tesla step by step.
The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.