As the year begins with a 12% decline, everyone is selling Tesla, but "Wood Sister" is bucking the trend and buying at the bottom.

Wallstreetcn
2024.01.15 00:24
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In 2023, Tesla was "unrivaled" and its stock price doubled in a year. However, at the beginning of 2024, Tesla suffered a "Waterloo". Since the beginning of the year, Tesla's stock price has fallen by 12%, marking its worst start since 2016.

In the past two weeks, Tesla's market value has evaporated by over $94 billion. Multiple negative news have emerged: car rental giant Hertz Global Holdings, Inc. has changed its attitude towards the electric vehicle market, Tesla has once again lowered prices in the Chinese market, and there are signs of rising labor costs in the United States.

However, against the backdrop of the market's pessimism towards Tesla, Cathie Wood, the head of ARK Invest, has increased her holdings against the trend. On January 11th and 12th, Cathie Wood's flagship fund, ARK Innovation ETF (ARKK), bought 94,733 and 93,654 shares of Tesla stock respectively, accumulating nearly 190,000 shares.

Tesla lowers prices at the beginning of the year, car rental giant Hertz Global Holdings, Inc. "sells off"

Following the same strategy as in early 2023, Tesla has once again lowered prices at the beginning of 2024.

Among them, the price reductions for the refreshed versions of Tesla China Model 3 (rear-wheel drive version) and China Model 3 (long-range version) are 15,500 yuan and 11,500 yuan respectively; the price reductions for Model Y (rear-wheel drive version) and Model Y (long-range version) are 7,500 yuan and 6,500 yuan respectively.

Since early 2023, Tesla has been significantly lowering prices to stimulate demand, resulting in a continuous erosion of its once high profit margin. In the third quarter, Tesla's automotive gross margin dropped from 27.9% a year ago to 16.3%. Moreover, with the wage increase for factory workers in the United States, Tesla's profit pressure may continue to grow.

Source: Jianzhi Research

This week, the news of car rental giant Hertz Global Holdings, Inc. "selling off" electric vehicles has also made many investors break out in a cold sweat. Wallstreetcn mentioned...Hertz Global Holdings, Inc. announced this week that it is selling one-third of its electric vehicle fleet in the US market, which has raised concerns about the acceptance of electric vehicles in the market.

However, this is more of an issue in the car rental market rather than Tesla itself. Data released by Cox Automotive shows that electric vehicle sales in the US are expected to increase by 45% YoY in 2023, indicating strong market demand.

In addition to factors related to Tesla itself, the market is also influenced by other factors. Analysts believe that the increase in the yield of the 10-year US Treasury bond to above 3.94% reflects consumer inflation exceeding expectations, which has undermined some investors' confidence in the Federal Reserve's upcoming interest rate cuts, which is unfavorable for Tesla's stock price.

This is because lower interest rates not only help boost stock valuations but also reduce financing costs for cars, helping Tesla and other companies sell more vehicles.

Furthermore, investors' "tax avoidance strategies" may also be another influencing factor in Tesla's sluggish stock price at the beginning of the year. In 2023, Tesla's stock price doubled, and some investors chose to sell their stocks in the new year to delay paying taxes. However, market analysis believes that the impact of this strategy on the stock price is relatively limited.

Tesla is the second largest holding in ARKK, second only to Coinbase

Currently, Tesla is the second largest holding in ARKK, accounting for approximately 8% of the investment portfolio, second only to Coinbase, the largest holding in the fund.

According to Wall Street News, as a long-term supporter of Tesla, Cathie Wood has a positive long-term outlook on the stock and has been continuously increasing her holdings recently.

From a technical analysis perspective, Tesla's stock price recently fell below the 200-day moving average (around $231), indicating market concerns about electric vehicle pricing, competition, and interest rate direction.

Katie Stockton, co-founder of Fairlead Strategies and market technical analyst, analyzed:

"Tesla has fallen below its 200-day moving average, which increases the downside risk for the stock. The next important support level is around $208."