Benzinga - by Shanthi Rexaline, Benzinga Editor.
The protracted weakness in Tesla, Inc. (NASDAQ:TSLA) shares is seen as a function of softer volume growth, and on Tuesday a fund manager delved into what the electric vehicle maker should do to reaccelerate sales growth.
What Happened: Tesla “uberbulls” tend to live in their own “echo chamber,” said Future Fund Managing Partner Gary Black. It wasn’t high-interest payments or disaffected customers that were hurting Tesla’s sales, he said.
To make his case, Black noted that retail giant Walmart’s shares climbed solidly on Tuesday following its quarterly results announcement. He saw the strong performance of the consumer-levered company as a testament that the “American consumer is alive and well.”
Black, who is also a Tesla investor, noted that U.S. consumer sentiment remained at a three-year high, thanks to the unemployment level, which is hovering near a 50-year low. Tesla is the third-largest holding of The Future Fund Active ETF (NYSE:FFND, )) with a 5.12% weighting,
To reignite sales growth, Tesla needs to advertise, according to the analyst. “To move beyond the early adopters, TSLA needs to educate and convince pragmatic consumers on why EVs are better than ICE vehicles,” he said.
Why It’s Important: Black has long been a proponent of advertising even as Tesla continues to hold off on this mode of marketing strategy. Tesla currently sells EVs through its website or company-owned showrooms.
Advertising, as recommended by the fund manager, could prove effective, especially as EV adoption slows. But he may not have made an apples-to-apples comparison as when he compared consumer sentiment toward Walmart and Tesla.
Unlike Walmart, which hawks majorly consumer discretionary items, Tesla sells consumer discretionary products, which are highly sensitive to economic conditions.
The Future Fund co-founder has also been rooting for Tesla initiating a stock buyback to arrest the slide in the stock.
Tesla ended Tuesday’s session down 3.10% at $193.76, according to Benzinga Pro data.
Check out more of Benzinga’s Future Of Mobility coverage by following this link.
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