Tesla Posts Mixed Q3 2023 Results, Eyes Uncertain Outlook

Electric vehicle maker Tesla reported its third quarter 2023 results this week, delivering a mixed bag amid a turbulent economic environment.

On the positive side, Tesla grew revenue 9% year-over-year to $23.4 billion, driven by a 27% increase in vehicle deliveries to 435,059 units. This keeps Tesla on track to meet its target of 50% average annual growth in deliveries. The company also generated $3.3 billion in operating cash flow and $0.8 billion in free cash flow during the quarter, while boosting its cash position to over $26 billion.

However, Tesla did see profitability decline, with operating income down 52% to $1.8 billion and operating margin contracting to 7.6%. Supply chain disruptions, factory upgrade downtime, and costs associated with ramping new factories all weighed on margins. On the earnings call, Tesla said it is focused on reducing production costs to restore profit trajectory.

Longer-term view at Tesla Stock

Looking ahead, Tesla plans to grow production as quickly as possible, expecting to exceed 1.8 million vehicle deliveries in 2023. This rapid expansion could further pressure near-term margins before scale effects kick in. The company will also be ramping key new products like the Cybertruck late this year.

Meanwhile, Tesla faces a murky economic environment, with potential recession risks, inflation, higher interest rates and geopolitical tensions. However, as a leader in the secular growth trend of electric vehicle adoption, Tesla is better positioned than most to weather macro headwinds. Its balance sheet strength also provides a buffer.

Tesla’s main priorities

Key factors to watch will include Tesla’s ability to reduce production costs and improve factory utilization as new plants scale up. Margin trajectory will be important. Cybertruck production and demand trends will also be monitored closely. Beyond near-term turbulence, Tesla aims to accelerate profits from software, autonomy and energy products over time. With strong execution, Tesla has a pathway to sustain growth and profitability, but the road ahead promises twists and turns.

Short-Term Trades

• The stock could see volatility and pullbacks after the mixed earnings, providing short-term trading opportunities. Look for support around $200-$210, which could be an area to buy on dips. Stop out if support breaks.
• If Cybertruck production goes smoothly in Q4, the stock could pop towards $250-$260. Traders can look to buy breakouts over $230 with a stop under recent swing lows around $210.
• Into year-end, tax-loss harvesting could pressure the stock, potentially sending it back to the $180-$190 range. This could offer a buy zone for a year-end rally play.

Long-Term View

• For long-term investors, any significant dips towards the $150-$180 range could be accumulation zones to build positions. Average in on weakness rather than buying all at once.
• The next major upside catalyst could come from strong Q1 2023 results showing production cost reductions. Sustained breakouts over the $300 level would signal a bullish shift in long-term trend.
• If economic headwinds lead to a recession in 2023, the stock could revisit the $100-$150 range. Long-term investors can hold through volatility or average down at lower levels.
• Upside price targets for 2024+ could be in the $400-$500 range if Tesla executes on 50% growth with rising margins. But be ready to be patient through short-term swings.

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