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Tesla’s Struggles Are Real

By Andrew Aziz  |  
Andrew's Newsletter  |  
Apr 17, 2024

Dear Traders,

Trading was fantastic today, with some excellent moves on Tesla. Thor and Paras traded Tesla live with me and we were all successful, even though we traded completely differently.

When you are on the top, it is easy for people to criticize you. Elon Musk is an amazing entrepreneur with an incredible track record, and for exactly the same reason, people love to cite him and say they know better than him. I am overall bearish on Tesla because I think it is overvalued, but that doesn’t make me any better than him. I think Wall Street will eventually agree that Tesla’s price should be about 5 times higher than other car companies.

The news came out yesterday that Tesla is slashing its workforce by more than 10% as part of a global retrenchment as it struggles with slowing demand. In an email to workers, the electric vehicle mogul Elon Musk cited the duplication of roles and the need to cut costs. If Musk’s mass firings apply companywide, they would amount to more than 14,000 people losing their jobs. Analysts expect that the EV maker’s sales might decrease due to slow production of its Cybertruck and a forthcoming pause in releasing new products.

It’s not a new story that Tesla is no longer a red-hot growth stock. But even by that standard and with its growth forecasts sinking rapidly, last month’s grim sales prediction from a key analyst of Elon Musk’s electric vehicle maker was still shocking. There will be zero growth in sales volumes for the electric vehicle maker this year, Wells Fargo’s Colin Langan said on March 13. And in 2025, it will be worse yet: volumes will drop. Shares of the company reacted appropriately, dropping 4.5% to close at a 10-month low. The stock has now fallen 32% this year, missing out on a broader rally that has pushed the S&P 500 Index up 8.3%.

The reason is clear: Tesla’s ability to grow at the furious pace that its expensive valuation promises is no longer a guarantee. The company still trades at a multiple that is significantly higher than other mega-cap high-flyers, yet the pace of expansion in its revenue and profit has slowed noticeably since last year. “Right now, the market is voting and telling us that it believes Tesla does not currently deserve that high valuation,” Adam Sarhan, founder and CEO of 50 Park Investments, said in an interview last month.

Congratulations to Paras and Lenny for being invited to be speakers at the upcoming MoneyShow virtual event. MoneyShow is a great conference, whether online or in person, and I have much respect for the organization.

They only invite high-quality presenters in the financial industry, and I have been honored to be part of their program for a few times now. This year, they invited two of our great traders, Paras and Lenny, to present online.

I would like to invite the community to register for their presentations (it is free) and show your support. Not only will you learn something from them, but you will also show that their presentations are valuable to the trading community and it will further support the BBT community. I am sure both Lenny and Paras will appreciate your registration.

Last but not least, tonight at 8 pm ET, Lenny is giving a presentation on how to trade the Open, and especially with the 5-minute ORB. He is also offering a comprehensive course on this topic through the Trading Terminal Academy. Please feel free to check it out.

Also, we are close to reaching 100,000 subscribers to our YouTube channel. If you have not subscribed yet, I would appreciate it very much if you would subscribe and help me (and us!) get to this milestone!

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To your success,