After Tesla’s Impressive Earnings, Is It Time to Buy EV Stocks?

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A number of weeks ago, it seemed everyone was calling for the demise of Tesla (TSLA) stock. 

CEO Elon Musk was dumping billions’ price of shares. The corporate was cutting prices on all its cars. Delivery growth was significantly slowing into the top of 2022. Political issues were plaguing the brand. 

It gave the impression of every thing was going fallacious for Tesla suddenly. Because of this, just about everyone was saying to sell Tesla stock. 

Not us. 

4 weeks ago, in these very issues, we told investors to purchase Tesla stock since it was oversold and undervalued

Since then, the stock has popped 40% in a month, including a giant post-earnings pop on Wednesday. 

Time to gather profits? Nope. 

Last night, Tesla showed us that each itself and your complete EV industry are due for a blockbuster 2023. Meanwhile, the stock market is acting prefer it desires to push right into a latest bull market. 

Put those two together, and we expect the stage is about for Tesla stock to maintain rallying and for certain smaller EV stocks to completely soar this 12 months.

As Goes Tesla Stock, So Goes EV Stocks

It really all goes back to Tesla’s earnings, which were delivered last night. 

The report itself wasn’t great. Delivery growth continued to slow last quarter. Average automobile sales price slipped. Gross margins contracted. Operating margins dropped sequentially. Free money flow production crashed. 

Truthfully, the numbers were pretty bad. 

However the conference call was great. 

In that decision, Elon Musk and company essentially said that the worst of Tesla’s growth struggles are behind it and that the corporate’s growth profile should meaningfully re-accelerate in 2023 and ‘24. 

The primary big thing management said is that the recent round of price cuts is working to stimulate demand. In response to Musk, the corporate is seeing a record variety of orders to this point in January 2023, with demand outnumbering production by 2-to-1. 

Over the past few weeks, due to weaker-than-expected delivery numbers and price cuts, investors were beginning to worry that Tesla had demand issues. That clearly isn’t the case. Demand for Tesla cars has never been more robust. 

After all, that’s very bullish for Tesla stock. 

Management said that even with all these price cuts, profit margins will remain strong. Management specifically said on the conference call that it’s their expectation that Tesla’s automotive gross margins will exceed consensus expectations in 2023. That is made possible due to falling input costs and economies of scale offsetting lower ASPs. 

In other words, Tesla is sprinting into 2023 with higher demand than ever, together with relatively stable profit margins. That’s a winning combination. 

Lastly – and most significantly – management said that, barring any force majeure events, Tesla will likely significantly exceed its vehicle production goal for 2023. The corporate’s official goal is to provide 1.8 million cars this 12 months, which might represent growth of around 35%. But based on Musk: 

“If it’s a smooth 12 months, without some big supply chain interruption or massive problem, we now have the potential to do 2 million cars this 12 months.” 

At 2 million deliveries, Tesla would grow delivery volumes by greater than 45% this 12 months. The corporate grew deliveries by just 31% within the fourth quarter of 2022. Subsequently, Musk and company are mainly saying that Tesla’s volume growth trajectory – the primary driver of the business – has a really realistic opportunity to significantly speed up in 2023. 

That, too, may be very bullish for Tesla stock. 

Overall, then, it actually looks like that – despite all of the negative press surrounding Tesla over the past few weeks – the EV titan is establishing for a record 12 months in 2023. 

That’s why Tesla stock is up greater than 40% over the past month. It’s also why the stock will keep rallying. 

But that is greater than only a Tesla story. As goes Tesla, so goes your complete EV industry. 

We aren’t just seeing demand for Tesla cars soar in early 2023. It’s happening in all places. Global search interest in “electric vehicles” has spiked in January after being dormant for the second half of 2022. 

A graph showing the change in search volume for electric vehicles over time

Following Tesla management’s commentary from last night, we expect 2023 to be a banner 12 months for the EV industry. 

Which means it’s time to buy EV stocks. 

The Final Word

But you may’t just go around and buy any old EV stock today. Despite the industry boom, most EV stocks will go to zero in the long term. That’s just how latest industries work. A lot of players at first. Only a few winners at the top. 

You could buy those winners. 

And we’ve found what we expect may very well be the most important winner of all of them. 

The stock we’re talking about is a super-tiny, almost entirely unheard-of EV parts supplier. It’s developing game-changing technology that we expect could change into standard on most electric vehicles by the top of the last decade. 

If that happens, this tiny stock could soar. Not 100% or 200%. But greater than 40X. 

Discover more about that explosive stock and its breakthrough technology.

On the date of publication, Luke Lango didn’t have (either directly or not directly) any positions within the securities mentioned in this text.

The post After Tesla’s Impressive Earnings, Is It Time to Buy EV Stocks? appeared first on InvestorPlace.

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