Is Tesla Stock A Buy Or A Sell Amid Cybertruck 'Halo Effect' Heading Into 2024? (2024)

Tesla (TSLA) stock has advanced conservatively since the EV giant delivered its first 12 Cybertrucks, releasing pricing and specs, at the end of November, with analysts projecting the new vehicle will bring a "halo effect" to TSLA shares.

However, on Dec. 8, Bernstein analyst Toni Sacconaghi wrote short Tesla stock is a "best 2024 idea" and that there is nearly 40% downside risk from current levels. Sacconaghi has an underweight rating on TSLA with a 150 price target.

"Tesla's key challenge is that it has a demand problem due to its narrow (and expensive) product family of essentially two vehicles," Sacconaghi wrote, referring to the Model Y and Model 3.

Meanwhile, it remains to be seen if Tesla will be able to meet its goal of delivering 1.8 million vehicles in 2023.

Tesla reported worse-than-expected Q3 financials on Oct. 18 leading shares to fall as analysts questioned the company's near-term strategy and whether a growth stock works if its EPS is not jumping in 2024. However, TSLA gained ground in November ahead of the Tesla Cybertruck delivery event and has been steadily advancing since those first 12 vehicles went to customers.

Overall, Tesla stock has surged in 2023 as investors bet that the EV maker's growth story was intact, despite near-term growth woes. With Tesla analysts projecting there is a "halo effect" surrounding the EV giant after its Cybertruck delivery event, the top question for investors is always, when is it a good time to buy or sell Tesla stock.

Cybertruck Event

On Nov. 30, Tesla delivered 12 Cybertrucks during an event at its Austin, Texas, factory with pomp and circ*mstance. Chief Executive Elon Musk outlining key specs for the hotly anticipated vehicle.

"We have a car here that experts said was impossible, that experts said would never be made," Musk told the crowd Thursday at the event.

"I think it's our best product. I think it's the most unique thing on the road, and finally, the future will look like the future," Musk added.

The EV giant is offering three trims of the Cybertruck, with the rear-wheel drive version starting at $60,990 with a 250 mile range. The base model will be available in 2025, according to Tesla's website.

The all-wheel drive version has a starting price of $79,990 with 340 miles of range. Tesla is also offering a top end trim, called the Cyberbeast, starting at $99,990 with a 320 mile range. Both the all-wheel drive version and the Cyberbeast have 2024 deliveries.

Four years ago, Tesla announced the price would start at $39,900. Since then, Musk had repeatedly said he wanted to price the base model under $50,000. Originally, Tesla and Musk stated the tri-motor Cybertruck would have 500 miles of range with the dual-motor model managing 300 miles and the base rear-wheel version getting 250 miles per charge.

The Tesla Cybertruck all-wheel drive option currently qualifies for the full $7,500 Inflation Reduction Act (IRA) tax credit, according to the Internal Revenue Service (IRS) site.

Tesla Targets Record Q4

Tesla aims to deliver 1.8 million vehicles in 2023. So far in Q4 Tesla China insurance registrations, a rough gauge for vehicle deliveries, total 119,900 for the quarter, up more than 7% compared with the same point in Q3. The number of China registrations through Q4 is also 8% higher than the same point in Q2 when Tesla delivered a record 156,676 vehicles in China.

Tesla needs to average 12,300 registrations per week for the remaining three weeks in Q4 to break its Q2 China deliveries record.

Tesla sold 82,432 China-made vehicles in November, up 14.3% from 72,115 in October, breaking two straight months of sequential declines in sales, according to China Passenger Car Association (CPCA) data. Of those deliveries, 65,504 were in China with the rest exported, representing a 129% increase compared to October and up nearly 5% vs. last year.

Meanwhile, Tesla on Dec. 4 confirmed the full $7,500 IRA tax credit will go away for two Model 3 trims in the U.S. The tax credit will be reduced to $3,750 for the rear-wheel drive Model 3 and the Model 3 long range trims on Jan. 1, 2024, according to Tesla's website.

Through the end of Q3, Tesla delivered about 1.324 million vehicles globally for the year, meaning the company needs to deliver roughly 476,000 in Q4 to reach 1.8 million. That's 2% more than its record 466,140 deliveries in the second quarter and a rebound from Q3's 435,059. Tesla reiterated its 1.8 million vehicle delivery goal in its third-quarter earnings.

However, since Oct. 18, analyst projections have dropped. Wall Street consensus has Tesla vehicle deliveries in 2023 totaling 1.797 million, just below that 1.8 million target, according to FactSet. Meanwhile, Wall Street is currently expecting 473,000 deliveries in Q4.

Tesla is expected to report fourth-quarter deliveries in early January.

Stock Falls After Earnings Amid Growth Concerns

TSLA shares sank after the company reported worse-than-expected Q3 earnings and revenue on Oct. 18. Tesla reported third-quarter earnings down 37% to 66 cents per share, the lowest in two years for Chief Executive Elon Musk. Meanwhile, quarterly revenue increased 9% to $23.35 billion. Tesla's auto gross profit margins, excluding regulatory credits, fell to 16.3%.

Tesla Stock And Musk

There is never a dull moment for Tesla and Musk, with the two inextricably linked. After Musk took over Twitter on Oct. 28, 2022 purchasing the social media platform for $44 billion, some longtime Tesla stock bulls worried Musk's focus on Twitter, along with negative attention, would weigh down Tesla stock.

Musk appeared to lessen those fears when he hired Linda Yaccarino, NBCUniversal's advertising chief, as the new CEO for X Corp., formerly known as Twitter. The Tesla chief added Yaccarino will focus on business operations while he will work on product design and new technology.

At the time, Wedbush analyst Dan Ives wrote the news ends some of the "distraction risk around the Tesla story."

However, Tesla stock cut back below a key technical level early on Nov. 16, following a four-day, almost 18% rally. The pullback also came after comments made on X by Chief Executive Elon Musk in support of an antisemitic post.

On Nov. 9, HSBC initiated coverage of Tesla stock with a reduce rating and 146 price target. Analyst Michael Tyndall wrote that Tesla vehicles may well be the main driver of revenue and profits currently, but the future for Tesla is about robots, autonomous vehicles, energy storage and supercomputers.

"We see considerable potential in Tesla's prospects and ideas, but we think the timeline is likely to be longer than the market and valuation is reflecting," Tyndall wrote.

The analyst added that Chief Executive Elon Musk presents a "considerable singleman risk."

Tesla A Monster Stock Over Much Of Its History

Almost single-handedly, Musk has turned the auto industry on its head, essentially forcing it to get aboard the electric-vehicle train.

It's a reason why Tesla has been a monster stock over much of its history, especially during its stratospheric run from mid-2019 to late 2021. The stock hit a bear market low of 101.84 on Jan. 6, but roared back until Q1 earnings.

On April 19, Tesla reported a big first-quarter earnings decline while revenue missed views. Profit margins for the global EV giant also fell below 20% as the company executed an aggressive price-slashing strategy in the first part of 2023.

Tesla reported revenue increasing 24% to $23.33 billion with EPS of 85 cents, a 20% decline compared to 2022.

The EV company's total gross profit came in at $4.5 billion, with Tesla's profit gross margin at 19.3%, down from 23.8% in Q4 and 29.1% a year earlier.

Tesla's Global Price Cutting Strategy

To maintain sales momentum, Tesla has aggressively cut vehicle prices throughout the year, which has dropped auto gross profit margins, excluding regulatory credits, below 20%. Tesla's auto gross profit margins excluding regulatory credits peaked at 30% in Q4 2021.

Tesla announced in early October that it delivered 435,059 vehicles during the third quarter, well below expectations and down 6% vs. Q2. Tesla followed the delivery miss by chopping U.S. Model 3 and Model Y prices, a major surprise to Wall Street. It cut the base Model 3 RWD price by $1,250 to $38,990 and the Model Y Long Range by $2,000 to $48,490.

In the U.S., Tesla has removed its standard range Model S and Model X versions in the U.S. and dropped the price of the Model X all-wheel drive version below $80,000. This now makes the Model X eligible for the federal $7,500 tax credit under IRA, confirmed by the Internal Revenue Service on September 6.

China EV Price War

Ahead of releasing the revamped Model 3 in China, Tesla on August 13 cut prices on two Model Y vehicle trims and began offering a limited-time insurance subsidy for the older Model 3.

On August 16, Tesla fired another shot in the EV price war, nearly doubling discounts on its luxury Model S and Model X vehicles in China.

Tesla Stock: Betting On Autonomous Vehicles And The Cybertruck

Musk is betting big on the Cybertruck and autonomous vehicle technology, along with a possible tailwind from the Inflation Reduction Act.

Musk has long touted Tesla's Full Self-Driving (FSD) technology and the potential value it brings to the brand.

Tesla has started rolling out its FSD beta for new vehicles equipped with Hardware 4, the company's newest computer system that contains more ports for data-collecting cameras.

The move comes after Elon Musk live-streamed 45-minutes of himself on Aug. 25 using "FSD v12 beta" to drive around Palo Alto. Musk had to make an "intervention" one time during the drive, when his vehicle tried to run a red light.

On Sept. 1, Tesla reduced the price of FSD in the U.S. to $12,000, down from $15,000.

Meanwhile, the National Highway Traffic Safety Administration (NHTSA) is reportedly close to ending its two-year long investigation of Tesla's driver-assist systems Autopilot and Full-Self Driving.

However it's unclear if NHTSA regulators will take significant action against the EV giant.

NHTSA in late July sought more information about Tesla's self-driving monitoring systems, according to reports. Specifically, regulators wanted to know more about the "Elon mode," in which some people, including Musk, have disabled the driver monitoring or alerts while self-driving.

In his livestream FSD ride, Musk frequently looked at his phone, but got no nags to pay attention to the road.

Cybertruck And Next-Generation Vehicle

The Cybertruck is the EV maker's first new passenger vehicle since the Model Y launched in early 2020.

The global EV giant also said during its Q3 release that it continues to "make progress" on its next-generation platform. Since the Tesla investor day in early March, the company has remained mostly silent on its next-generation vehicle. At the annual shareholder meeting, Tesla teased a vehicle silhouette.

Musk said in the first week of December the first production line for the next-generation Tesla vehicle will be at its Texas facility with the second at its under construction Mexico plant. Meanwhile, local reports out of China allege Tesla is planning to restart construction of the third phase of Giga Shanghai factory, which will be dedicated to producing the $25,000 next-generation vehicle.

This comes after Musk told investors on Oct. 18 that Tesla is laying the groundwork to begin construction at its Mexico plant, but with some caveats.

"We want to get a sense for what the global economy is like before we go full tilt on the Mexico factory," Musk said.

"If interest rates start coming down, we will accelerate," he added.

The Long-Awaited Semi Hauler Unveiled

In Dec. 2022, Tesla unveiled its long-awaited Semi, an 18-wheel, long-haul electric freight truck, five years after it was first announced. However, in March, Tesla ordered a voluntary recall of 35 Semi trucks due to a parking brake issue.

Tesla began delivering its long-haul Semi trucks to PepsiCo (PEP) in December. Further, Musk has indicated there are plans to build out a charging network for long-haul trucks.

Musk did not specify how much the eighteen-wheeler costs. The Semi is capable of traveling an estimated 500 miles per charge. It can accelerate from zero to 60 in 20 seconds, Tesla says. The company expects to ramp production over the next year and aims to deliver 50,000 units in 2024.

Before the recall, PepsiCo planned to deploy 36 Tesla Semi trucks, with 15 in Modesto and 21 in Sacramento.

Pepsi placed its order for 100 EVs when the Semi was first announced in 2017.

Is Tesla Stock A Buy?

Tesla stock gained around 22% in November ahead of the Tesla Cybertruck delivery event. TSLA shares in December have continued to advance.

TSLA shares sank after the company reported worse-than-expected Q3 earnings and revenue on Oct. 18. However, The stock is building the right side of a double-bottom base giving it a 278.98 buy point, according to MarketSmith analysis.

Since the beginning of 2023, Tesla stock has surged around 90%, broadly outperforming the broader S&P 500 index.

Tesla stock ranks fifth in the 35-stock IBD automaker industry group. The S&P 500 component has an 81 Composite Rating out of a best-possible 99. Tesla stock also has a 79 Relative Strength Rating and an 88 EPS Rating.

The market status is showing a "confirmed uptrend." Tesla stock is about 15% below its official buy point. TSLA is making a gradual advance from its 50-day line. Aggressive investors could use the Nov. 29 high of 252.75 or a trendline just below 250 as early entries.

Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.