We Should Talk About Tesla

Tesla continued its decline yesterday, bringing the loss to 32% since the beginning of the year greater. When we look at the last year, we see that the stock has stagnated. So, unfortunately, it was one of the stocks that could not benefit from the great Nasdaq rally. When we look at 5 years and look at it as a longer-term investor, there is a return of 796%. It's a very good return, but there are stocks that provide better returns than this. Frankly, I will try to give you an example later, especially artificial intelligence stocks, and when we look at the whole, those who have held it since the first day it went public have gained 13280%. At its peak, the price reached 30000% at one point and it was the only investment instrument that could compete with bitcoin at that time. We just talked about AI stocks.
It's worth taking a look at SoundHound. This is a company that I don't understand at all, that is, I can't figure out why it would be valuable. Let me tell you, this company is a voice understanding company. For example, it provides services to call centers. For robots to understand what the customer is saying. It's an extremely old technology, and there are a lot of competitors. The ratios are already terrible. For example, price divided by sales of the stock is 34/63, the industry average is 2.93, 1000% above the industry. Price divided by sales forward, that is, when we look forward, there is also a number of 30. Price divided by book value is 126, the industry average is 3.08, which is 4000% above the industry average, and people bought this stock yesterday. They raised 24% in one day. They rose another 11.21% after the stock market closed. This shows that artificial intelligence is currently entering the bubble phase. That's why I'm already shrinking my portfolio due to artificial intelligence. If this type of ridiculous stock gains this value, we are generally coming towards the end of that trend. At least that's what I can say. But now let's get back to Tesla.
What should you do if you have an investment in Tesla? If you haven't invested in Tesla yet but are thinking about it, let's talk about all of these, are we in the right place to get involved? Once you get into the process, you'll see that I'm not offering you a price recommendation, but rather that I'm talking about questions you should ask yourself about Tesla. If you pay attention to the logarithmic chart of how Tesla's stock has behaved since it went public, it initially ran in a channel for a long time. Then one day, it tears that channel and reaches a higher channel. He's been struggling on that channel for a long time. Then it reaches a higher channel. We are currently struggling in that channel. Switching between these channels takes a long time. The company goes public in 2010, but it drags on until mid-2012. An increase begins in mid-2012. It increases for 6 months.
It reaches its new channel and begins to struggle in this new channel until 2020. So the stock is fluctuating between a channel between $9 and $20 here. An upward breakout is occurring again in 2020. Again, if you pay attention here, it reaches the upper channel in a period of approximately 6 months. The base price in that upper channel is around $160. Since a lot of money was printed at that time due to the effect of Covid, the stock is heading towards higher and higher peaks. It approaches $400 and then declines. Then he struggles in this channel. Currently, the bottom of the channel is at 120 - 130 dollars. We are somewhere around the channel average. These steps actually show us the basic journey of technology stocks.
In technology stocks, steps can only be overcome when a technology proves itself. Don't get me wrong, what I mean by technology's own proof is that Wall Street idiots don't understand technology. As soon as they see that the technology can be reflected in financials, Wall Street and investors start running towards the stock. Maybe someone remembers. He has a small roadster car. Elon Musk is a charismatic personality who was successful at PayPal before. That's why investors come here every once in a while. But then doubts begin. Problems like what will happen with this roadster car, will Tesla be able to produce a real car, and the stock is stuck in the channel and it could have been different if they had gone and talked to investors at that time. I wasn't a Tesla investor at that time, but I was looking into it. They were afraid: Is Tesla a toy or will it be able to turn into a serious manufacturer? When will Tesla produce real cars that appeal to the masses and will Tesla be able to overcome this stage without going bankrupt?
These were being talked about, and in fact, it was a justified concern. People were in fear. Will Tesla pass here or not? Later, Tesla's Model S and then Model X were released. One was a large sedan, the other was a large SUV. The real cars were real cars and the vehicles were very nice. They were received with admiration. Elon Musk also did good marketing there. For example, the Model X's doors opened upwards, etc., and people realized Tesla was serious. They said that Tesla is a company that really intends to produce cars, this is not Elon Musk's toy. There will be no more companies like small boutiques that produce only roadsters or sports cars. I think his intentions are serious and investor inflows have started to occur. This suddenly moved Tesla from its peak price of $2.62 at that time to $10. So there is a 5-6 fold increase. Of course, if you take it lower, the increase becomes even more serious, there is a 7-8 fold increase.
So what are the concerns about this channel? Worries are over. Because this is a technology company and it was still making losses, especially at that time. It is still making losses and eating up cash. Of course, it is justified to have concerns. By the way, as an investor in this channel, I started buying Tesla in 2017-18. What are your concerns this period? Tesla produced Model S and Model X. These are nice cars, but they are very expensive and upper segment vehicles. Will Tesla be able to produce more economical cars? Model 3 was being talked about at that time. One of the concerns is will the Model 3 get orders? Would there be a demand for such an electric car? Tesla presented the vehicle at that time and made it available for pre-sale. Pre-orders poured in like crazy. That concern was passed. Then the question of whether Tesla would be able to produce the Model 3 at scale began. Because Tesla has never produced a product of this size before.
Indeed, Tesla had a very difficult time. Elon Musk slept and woke up in the factory, they set up tents to produce the car. We read news articles every day about Tesla not being able to do this job due to problems in their main factories. Eventually but model 3 started to scale. The next question is, okay, he produced the Model 3, but will he be able to make money from it? Or the question of whether it would go bankrupt while moving into this business arose. In fact, we are talking about that question in May 2019. That question has become very intense during this period. I will never forget that Tesla made such a sharp decline, from 300 dollars at pre-split prices, to 130 dollars, now divide by 15, that is, to today's 8 dollars. But then Tesla delivered its first profitable quarter. He showed that he could profit from Model 3 and an incredible rally began. At some point, Model Y also joined this rally. The rally was reasonable up to a point. Then, partly because excessive money was printed due to Covid at that time, the rally exceeded itself a little and the price of the stock went up to 400 dollars.
After $400, FED interest rate increases started to occur. While we were thinking about it, we experienced the last month of 2022 as a nightmare, as Elon Musk sold shares to buy Twitter. After that, the stock rebounded. Now we continue on this channel. So, what are our concerns now while we are on this channel, right? There are new concerns that the stock has started to move downwards again. Because don't worry, what Elon Musk tweeted that day is of limited importance. Ultimately, the investor wonders whether this company is a profitable growing operation, and there is plenty of concern about that right now. The first concern is Tesla's profit margin declines. Tesla's profit margin has been declining for the last 6 quarters. It's still above a healthy 16%. It turned slightly upward again in the last quarter. But will this decline continue?
Secondly, how is Tesla's sales growth? There are also rumors around the world that the electric car industry is a lie. And, as you know, the FED keeps interest rates high. Will Tesla's sales growth come back because of this? Is this over? Will he not be able to sell the vehicles anymore? The next question is will Tesla achieve fully autonomous driving? This is a fair question, by the way. Because even if Tesla achieved all these as an automobile company, it would not be worth this money. Therefore, it is important whether autonomous driving can be achieved or not. Therefore, will we consider Tesla as an artificial intelligence company? Look at the SoundHound nonsense, how is it evaluated or is it like a car company? If we consider it as an automobile company, our business is bad.
Will the Tesla energy business grow, that is, the giant battery business? If it will grow, at what pace will it grow? This is another important and confusing question. When will Tesla's $25,000 vehicle, which will appeal to the lower, main giant market, be released? What kind of profit margin will it come out with? And finally, as you know, we have a robot. We have Optimus robot. Is that bullshit? Really? The answers to these questions are currently being discussed in the market, and the tendency of the market these days is to give negative answers to all of these questions. One of the issues that fuels the market's negative responses is the comments of Wall Street analysts.
For example, yesterday Colin Langan was working at Wells Fargo, he was an analyst. He made a statement about Tesla and said, "I say buy Tesla and I think its price will drop to $125." Therefore, there is a possibility of it going down around 26%. In fact, while making a statement, it was 30%. But the announcement dragged Tesla down roughly 4% yesterday. Combined with some other factors, and it looks like the man is right for now. So who is this man? How does this guy perform? For example, the success rate so far is 46% in all stocks. If you had listened to this man's advice on all stocks, you would have lost an average of 5.8% in stocks. I guess he's not a very good analyst. When we look at the Tesla details, the ratio is even worse in Tesla. Around 39%. He has been evaluating it for almost 10 years. Now, do you think we should take what this analyst says seriously? The successful target setting rate for Tesla is 39%. If you had listened to this man, you would have lost 43.27% of your money in Tesla. There's nothing to take seriously.
But yesterday this guy gave a downward price target on Tesla, so the stock is moving around 4%. So, people have a lot of questions these days. They've got a lot of concerns, and even when you get an analysis like this from this great Wells Fargo analyst here, Colin Langan, who kind of supports those concerns, the stock is going down. Because the stock has no momentum support right now. Secondly, fundamental questions worry people. We need to return to those questions about Tesla and develop our own thoughts about those questions. If we are an investor. When will Tesla's profit margins stop falling? I think there is more. Because at the moment, it has not yet managed to raise vehicle prices much.
Because the FED keeps interest rates high. Secondly, we are currently on the ramp up of Cyber Truck. So, as far as I understand, Cyber Truck vehicles have been able to reach a pace of 300 - 400 per week. This needs to increase more. Of course, the car will not make money at that time. It is not possible to make money with those customs. But the costs will be reflected in the profit margin. Therefore, it would be a joke to expect a serious recovery in profit margin this quarter and the next quarter. I think you should not deceive yourself. Miracles can always happen, of course, but I am a person who little believes in miracles, and in his latest statements, Tesla said that they had reached a certain limit in reducing costs and that they would have difficulty in reducing costs from now on. Tesla is a great company in this regard, in terms of reducing costs. But everything has a limit and when we consider ramp up, this job is difficult.
Plus, it seems certain that the FED will not reduce interest rates, at least in March. Now everyone is talking about the second half of the year. Because the American economy still seems strong. In this context, since it is not possible to sell cars on credit, Tesla's problems in this area will not end. Then there's China. The economy in China is very troubled and hundreds of automobile companies are competing in that troubled economy. They also push prices down. So I'm negative on the profit margin question until at least the third quarter. There may be some upward direction in the third quarter. If it happens in the second quarter it would be a miracle. But this will pull us backwards. Has sales growth stalled? Will he come back? Last year Tesla actually continued to grow. The growth in the last quarter is compared to the same quarter of the previous year. But other than that, Tesla's growth actually continued. Will it grow this year too?
Elon Musk made a statement in the last balance sheet. "We think that our growth rate will slow down significantly in 2024," he said. If Elon says this, it is certain that the growth will not be much this year. At least until the FED drops interest rates. The answer to this question is not very positive. In fact, Wall Street is only interested in these two issues. Is the profit margin growing? Will growth come back? I think the problem with profit margin may continue. Sales growth is also slowing down 100%. Was the electric car industry a lie? I definitely don't think so. The electric car industry is currently preparing for a new phase. They will launch more economical cars. Tesla is one of these players. It will continue to grow slowly until there. But right now, there is no crazy growth in 2021 -2022.
Because electric car sales in the luxury segment have reached a certain saturation. Now we need cars for the lower segment. There's still a long way to go from there. That's my opinion at least. Will Tesla achieve autonomous driving? Many positive things have been written and shared about the 12.2 version of fully autonomous driving in the United States. As of the beginning of this week, version 12.3 has been installed on vehicles and a small number of people have it now. But the comments are that there is an extraordinary development. Could fully autonomous driving be achieved by 2024? It is difficult to be sure of this, but the road seems to be going well here and this is the most important criterion for us because if autonomous driving is successful, new revenue models will be opened for Tesla, first of all, such as sharing and selling this autonomous driving software to others.
Second, Tesla cars will become more valuable. Because there is no fully autonomous car that can go somewhere on its own, anywhere under any conditions. This Tesla car will bring it to a very different place. Because of this, more people will buy fully autonomous driving software. This will directly create revenue growth. Also, the robot taxi projects we always talk about may be realized. So this is very critical and has a place in Tesla's valuation. Tesla has a rapidly growing energy business. Will big batteries continue this growth? At what pace will it grow? What will the profit margin be like? They are investing a lot in this regard. New facilities are coming now. I'm not sure how much it will reflect in 2024. But I think there will be serious growth in the coming years.
When will Tesla put the $25000 vehicle on sale? What kind of profit margin will he put it on sale? What they say is 2025. But other than that, we don't know much. Elon Musk offers little pieces of information about this left and right. But it seems there is still time for this. Are Optimus bots a hoax or are they real? I think there is no need to talk about this now. This is a newly developing technology. If he is successful in the future, it will be very good.
This is the situation, so I don't see anything concrete that will take Tesla stock much higher in the short term. What could happen here is that when the first quarter balance sheet comes out, if we see that the profit margin is not as bad as we thought, or even is getting better, the market will be excited. Tesla's first quarter sales will be announced at the beginning of April. There, the market is not so pessimistic, but if there are slightly better sales or a good announcement, the stock may go up. I don't think the probability is high. Because the news says that car sales are not going very well. If the FED lowers interest rates, the stock may go up.
But we see that the FED is postponing interest rate cuts. So I don't see any major news coming right now. For example, there are many videos shared about autonomous driving, we are getting better there. However, if Tesla's application for a concrete level 4 autonomous driving comes into effect, the stock will go up. Otherwise, people look at it with suspicion unless they try it themselves. So if you are a short-term investor, we do not expect such great upward news about Tesla right now.
Technically, it's not bad where it's at. So, an upward bounce can be expected from here, around $165. But it's not a big deal. If you look at it long term, my answers to all these questions are extremely positive. Tesla will definitely increase its profit margin. Tesla's sales growth will return. Tesla will achieve fully autonomous driving. The electric car was definitely not a lie. Tesla will expand its energy business tremendously. There is a great need for this in the world. The $25000 car will also come into play. One day, the Optimus robot will come into play and Tesla will become one of the most valuable companies in the world. But we may conflict about the answers to these questions, and if you say you don't know as well as you about these questions, stay away from the feeling.
This is a very tiring feeling. This is a very difficult stock. Because it is trying to do brand new things in the automobile industry, one of the most traditional industries in the world. It has completely taken on the energy sector, one of the largest sectors in the world. Autonomous driving with artificial intelligence is one of the largest artificial intelligence projects in the world. He's trying to make his way there. On the other hand, EIon Musk fights with the whole world on Twitter on other issues, including political issues. It definitely has an impact on the stock. That's why large investment institutions do not get into Tesla.
Among the Magnificent 7, Tesla's share from large institutions is the least. Individual investors are more dominant here, and concrete answers to the questions I just mentioned are needed for institutional investors to step in again. For all these reasons, if you are a Tesla investor, you should not ask yourself every day why this stock is falling or why it is rising. You should be looking for answers to the questions I just mentioned. Is autonomous driving advancing? Is the battery business progressing? Is the $25000 car coming close? I follow there and what I see there satisfies me. My average cost is also low. That's why I'm more willing and ready to suffer. But don't expect much from Tesla in the short term.
However, as I said, a few news can push us upwards. I hope that has been revealing. This is how I see Tesla. What I am telling you is not investment advice. Everyone's maturity, sense of risk and aptitude for technology are different. Nowadays, ridiculous companies like Sound AI can run wild. Those who catch something like that feel very happy. Of course you will feel happy, this is a serious increase. I don't expect anything like that from Tesla right now. When the answers to these questions are given, become clear and positive, then we will move on to the next leap, and if Tesla is going to make this leap within 5 - 6 months, as it did when we looked at the previous examples, I want to be there from the very beginning of the game.
Because I know that once the stock starts to go up, super doubts will arise again. Will this come back? Is this bullshit? Is this a bubble and people will miss out on this whole rally if they are not there from the start and have not created a good cost to themselves, it is clear from experience. That's why I close my eyes, go and buy my stock. When analysts, like the Wells Fargo charlatan I just mentioned, reduce the stock with their statements, it becomes a new buying opportunity for me. But believe me, I have no idea yet where the price will go. This range is a critical range. He can come back from here.
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.