Why is Tesla Stock so Cheap?

We’re already near the downside scenario here.

Andrew Willis 20 January, 2023 | 4:28AM
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Andrew Willis: In the fourth quarter, Tesla (TSLA) produced around 30,000 more vehicles than it delivered. Are we dealing with slowing demand for their EVs? Was it the events of Elon and Twitter that did it? Or do we need to go further back?

Stock strategist Seth Goldstein points out that fourth-quarter deliveries for the EV company still came in 31% higher on a year-over-year basis – suggesting that demand continues. But consumers aren’t always on the same timeline as investors.

The market is currently pricing the stock near the downside scenario of our fair value estimates, where, among other poor outcomes, we assume that competition takes a bite out of deliveries and cost reductions don’t materialize at Tesla. Meanwhile, consumers can still love the car itself and be willing to pay a premium for it as prices drop.

For Morningstar, I’m Andrew Willis.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Tesla Inc142.05 USD-3.40Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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