Does Tesla (TSLA) Look Like a Good Buy for July?

The electric vehicle market is booming thanks to growing climate change concerns, government incentives, and the expansion of charging infrastructure. EV major Tesla, Inc. (TSLA – Get Rating) has been one of the first movers in the battery electric vehicle (BEV) space. TSLA has a dominant share in the EV market, but its market share has declined off late due to the shifting focus of traditional automakers on EVs.

In this piece, I have discussed why waiting for a better entry point in TSLA could be prudent.

As the adoption of battery electric vehicles grows, more and more automakers enter the fray to grab a pie of the highly lucrative EV market. Traditional automakers are slowly shifting their focus from internal combustion engine (ICE) vehicles to electric vehicles (EVs), with many planning to phase out their entire ICE vehicle lineup as early as 2030.

Strict government regulations on emission standards, incentives for EVs, and improving charging infrastructure are driving EV sales. According to Goldman Sachs, electric vehicles will comprise about half of all new car sales worldwide by 2035.

TSLA’s EPS and revenue missed analyst estimates in the first quarter. The company’s EPS was 0.4% below the consensus estimate, while its revenue missed analyst estimates by 0.1%. Despite higher sales, TSLA’s net income during the first quarter took a hit due to price cuts undertaken by the company.

The company attributed the year-over-year drop in earnings to the underutilization of new factories, which stressed margins, higher raw material, commodity, logistics, and warranty costs, and lower revenue from environmental credits. During the earnings call, CEO Elon Musk emphasized that the uncertain macroeconomic environment could impact new car purchases.

Musk said…

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