Why Financial Pros Are Worried About Tesla (TSLA)

[View in browser]( [The Spill Logo] BROUGHT TO YOU BY: [Logo]( Proprietary Data Insights Financial Pros’ Top Automotive Stock Searches in the Last Month Rank Ticker Name Searches #1 [TSLA]( Tesla 173 #2 [NIO]( Nio 57 #3 [GM]( General Motors 13 #4 [F]( Ford 13 #5 [RACE]( Ferrari N.V. 3 #ad [Adding Color to the Investment Spectrum]( Brought to you by [Kurv]( [How Does Kurv Deliver Higher Total Returns? (13% Yield)]( [Kurv - How Does Kurv Deliver Higher Total Returns? (13% Yield)]( KURV Founder and CEO, Howard Chan, joins me to discuss their high yielding ETFs. Funds including GOOP (based on GOOGL) and TSLP (based on TSLA), are generating double digit yields. We discuss the strategy, the risks, and how these funds compare to Yieldmax funds including TSLY. If you like dividend investing, I hope you enjoy this discussion of KURV ETFs. [Learn more]( Should You Buy Tesla’s (TSLA) Stock? Investors weren’t impressed with Tesla’s (TSLA) latest earnings report. Shares plummeted over 10% as the company missed EPS estimates but beat on revenues. Still, financial pros were looking for signs of hope, according to our TrackStar data. Search volume focused on Tesla’s upcoming affordable model and Robotaxi initiative. However, we all know Musk often sets audacious goals and consistently misses timelines. So, where does that leave us? Tesla’s Business Unless you’ve been living under a rock, you know who Tesla is. Under the leadership of CEO Elon Musk, Tesla has expanded its product lineup to include a range of electric vehicles, energy storage systems, and solar products. The company operates multiple manufacturing facilities globally, including Gigafactories in the United States, China, and Germany. Tesla's direct-to-consumer sales model and over-the-air software updates have set new standards for customer experience in the automotive sector. Currently, the company offers five models, with the Cybertruck being its latest innovation. Tesla segments its business into the following areas: - Automotive (78% of total revenues) - Includes sales of electric vehicles, regulatory credits, and leasing. - Energy Generation and Storage (12% of total revenues) - Encompasses solar panels, solar roof tiles, and battery storage products. - Services and Other (10% of total revenues) - Covers vehicle maintenance, repairs, and merchandise sales. In Q2, deliveries dropped 4.8% year over year as the company struggled to sell vehicles, especially in China, where competition is heating up. Margins compressed as Tesla attempted to lure customers in with discounts. However, energy storage revenues doubled for the quarter from the prior quarter and a year ago. Musk spoke about his vision for robotaxis - an uber-like program where owners could rent out their cars. While he said it could happen early next year, the Robotaxi event scheduled for August has been pushed back to October. The real key to the company’s immediate future lies in the release of its lower-priced model (around $30,000) set to debut in 2025. Investors believe it could quickly become Tesla’s top seller, similar to Mercedes lower-end lineup. Financials [Financials] Source: Stock Analysis Up until recently, Tesla has seen incredible revenue growth. That came to a screeching halt as EVs saturated the market, particularly in China. This has forced Tesla to cut prices, compressing gross margins down to 18%, in line with some top auto makers. Yet, it knocks Tesla out of the high-growth category. Nonetheless, Tesla is an extremely profitable company, generating $3.0 billion in cash from operations each quarter and having very little debt. That gives the company plenty of cash to reinvest where it needs. Valuation [Valuation] Source: Seeking Alpha You can’t look at Tesla and say it's a value stock. And with margins compressing and growth in reverse, it’s tough to get excited about these multiples, especially when you can pick up General Motors (GM) or Ford (F) for 2.5x and 4.1x cash flow. Higher growth companies like Ferrari (RACE) command a premium. But not to the same degree as Tesla. Growth [Growth] Source: Seeking Alpha Tesla’s supercharged growth has recently faltered. That’s put it in a precarious position where it is seeing negative comps while competitors like GM and Ford are growing sales. Still, the introduction of a more affordable model in 2025 should juice sales. Profitability [Growth] Source: Seeking Alpha Tesla delivers enviable margins, though its gross margins are almost 8% lower than they had been after the pandemic. Premium brands like Ferrari can command higher prices, which translates into greater net income. Tesla used to be in that position but has seen its competitive advantage erode. [How to potentially dominate earnings in 3 steps]( 15+ years of trading wisdom condensed into one powerful strategy. Learn to spot opportunities others miss during Q3 earnings. Daily intel included: Morning briefing, Midday update, Evening report. Claim your free Ultimate Strategy Guide To Trade Earnings Season now. [Limited time offer. Click here before this opportunity vanishes!]([Ad] Our Opinion 8/10 Despite lower sales, Tesla continues to run a much better business model than most of its peers. While we are skeptical of the Robotaxi venture, the more affordable model due out in 2025 should add a significant boost to the company’s top and bottom line. 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