Tesla – Another disappointing quarterly result. Will the share price collapse?

Tesla disappoints again with quarterly figures
 
The electric car pioneer Tesla has once again failed to meet expectations with its latest quarterly figures. For the second time in a row, the company recorded a significant drop in profits. Between March and June, the company, which is headed by Elon Musk, generated only around $1.48 billion, a decline of 45 per cent compared to the previous year. And that is no small matter – for any company!
 
Weak demand and price war weigh on balance sheet
 
The tough competition in China and weaker demand for electric cars in the US and Europe have had a negative impact on Tesla's balance sheet. Operating profit fell by more than 20 per cent to $3.674 billion in the last quarter, as the company announced after the close of trading on Tuesday. Sales in the car business fell by seven per cent to $19.9 billion compared to the same period last year.
 
Growth in the energy sector
 
Despite the decline in the automotive business, total revenue rose by two per cent year-on-year to $25.5 billion. This increase is mainly due to the growing energy and power storage business, which doubled to $3 billion.
 
Impact of market developments
 
Tesla, which for a long time was able to sell every vehicle it produced without any problems, is now feeling the effects of the market slowdown and the increasing competition from other manufacturers. In the second quarter, deliveries fell by almost five per cent to around 444,000 electric cars, which was better than analysts had expected. Last year, Tesla delivered a total of around 1.8 million vehicles, while no concrete forecast has yet been made for this year.
 
Strategies to boost demand
 
In order to revive flagging demand, Tesla has not only reduced prices in recent months, but has also offered favourable credit terms. Analysts expect the costs of these discount campaigns to be spread over the next few quarters. However, an end to the slump in demand seems to be in sight, as Tesla is forecasting a gradual increase in production for the third quarter.
 
Competition with Nvidia in the AI sector
 
Nvidia (NASDAQ:NVDA)'s shares also came under pressure on Tuesday after the close of the market. One of the reasons for this was an announcement by Tesla CEO Elon Musk, who has set himself a new ambitious goal: ‘We see a way to compete with Nvidia using Dojo,’ Musk said in the analyst call after the Q2 figures. ‘We have no choice. We will get Dojo up and running.’
 
Tesla's Dojo supercomputer project
 
Dojo is Tesla's supercomputer project, which is designed to process huge amounts of data to train the neural networks of the autopilot system. Dojo uses an architecture developed by Tesla itself and is based on the D1 chip, which was also developed in-house. The aim is to make autonomous driving safer and more efficient. Musk was optimistic, but emphasised that competing with Nvidia was a major challenge. “It's easier said than done to compete with Nvidia,” he added, showing his appreciation for the power of Nvidia hardware. “The demand for Nvidia hardware is so high that it's often difficult to get the GPUs.”
 
Tesla stock – our analysis
 
The Tesla share was able to break out of the low of our purple box at $140.94 to $100.98. However, we considered this to be a corrective recovery at the time, and not a sustainable breakout. We believe that the share is still in a major correction overall. We do not expect the end of this correction until the area of the violet box at the bottom of the chart, between $88.70 and $46.74. This is where a very strong trend reversal should occur, leading to a very strong increase that could last for several years. We see the ideal area to buy the stock at the bottom of this range.
 

 
We are not pessimists! There is still a chance for the stock to defend the upward trend. However, the stock should not fall below $198.87, because this would break the upward trend and our forecast would come into effect. However, if the stock now makes a very strong turnaround above this price, there is a possibility that the price will build a nice five-part upward movement and form a future high in the region of the red circle between $317.69 and even $369.60.

If this is successful, the share will then return to a minor correction, the bottom of which would be an excellent time to buy. You can find out more about us by clicking on the link next to my profile picture on our website.
 
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