Some value hunters may be tempted to invest in Tesla (NASDAQ:TSLA) stock now, but don’t assume it’s a good value. We’re giving Tesla’s stock a “D” grade and warning potential shareholders of potential price declines in 2024. Tesla CEO Elon Musk already provided some warning signals.
Musk said vehicle volume growth “may be notably lower” in 2024, adding that Chinese EV firms will “demolish” their rivals if trade barriers aren’t established. When all is said and done, you’ll probably just choose to stay away from TSLA stock for the time being.
China EV Production Cut: A Big Red Flag for Tesla
Here’s what you need to know about Tesla’s problems in China. Citing “people familiar with the matter,” Bloomberg reported that Tesla “instructed employees at its Shanghai facility to lower production of both the Model Y and Model 3.”
Instead of working the usual 6.5 days per week, workers on those production lines will reportedly now work five days per week. Moreover, “Output has been trimmed starting earlier this month,” and “staff haven’t been given clear indication of when production will go back to normal.”
This has implications that evidently reach beyond China. Tesla’s Shanghai factory “makes cars both for the domestic market and for export.” We don’t want to jump to any conclusions, but it’s possible that Tesla is having serious problems selling EVs in China and elsewhere.
Is Musk Too Distracted to Effectively Run Tesla?
Another issue to consider is that Tesla’s chief executive may be focused on other businesses. Sure, Tesla was once Musk’s priority, but that might not be the case in 2024.
As a Barron’s report observed, “Musk also is busy running” SpaceX, Neuralink and the Boring Company. Musk is occupied with the “relatively new xAI artificial intelligence start-up behind the Grok chatbot, a rival to OpenAI’s ChatGPT.”
And, of course, Musk is focused on the X social-media platform, formerly known as Twitter.
To a certain extent, Tesla has been assigned a premium valuation for many years due to Musk’s leadership. When traders bid up the Tesla share price, they sometimes did that because they strongly believed in Musk.
However, just managing the X platform will continue to take up Musk’s time and attention. Then, Musk will also be distracted with his leadership duties at the other aforementioned companies. Consequently, wary investors might choose to avoid TSLA stock for a while.
Don’t View TSLA Stock as a Bargain Just Because It’s Down
Tesla stock has performed poorly in 2024 so far, especially for a “Magnificent Seven” member. Before you go bargain shopping, consider Tesla’s problems. There’s evidence that the company is having issues in China.
Plus, wary investors might wonder whether Musk will focus on Tesla enough to run it effectively. Hence, we’re giving TSLA stock a “D” grade and aren’t currently recommending it for a buy-and-hold position.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.