Tesla: Gross Margins May Have Bottomed Out (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• Tesla, Inc. has outperformed the market since my last “Neutral/Hold” update. However, I believe this is temporary. I maintain my earlier stance:
• The input commodities outlook is favorable. Many of Tesla's raw material markets such as lithium, nickel, cobalt, and graphite are in a state of oversupply with a dampened price outlook.
• Tesla's revenue mix shift away from automotive and toward the energy business is another accretive factor to gross margins.
• The recent run-up in prices seems to be driven by multiple expansion rather than expectations of earnings growth. I doubt the sustainability of this amid the higher-for-longer rates narrative.
• The relative technicals also point toward a negative to neutral outlook for Tesla vs. the S&P 500.

Read the full article here.