An Alternative Look at Tesla

October 20, 5:32 pm

In the last few days, Tesla’s (TSLA) stock price experienced a notable dip of over 15%, ending the week at a price of $211.99, marking the most challenging week for the stock this year. However, the stock still boasts an impressive 96% increase year-to-date. This decline was catalyzed by CEO Elon Musk’s somber outlook on macroeconomic issues during the third-quarter earnings call. For this quarter, ending on September 30, 2023, Tesla reported revenues of $23.35 billion and profits of $1.85 billion, both showing a decline from the previous quarter and the same quarter last year. Musk expressed concerns over the high-interest rate environment, fearing it might thwart potential buyers due to affordability issues.

Yet, on a promising note, Musk reiterated Tesla’s hefty investment in Artificial Intelligence (AI), envisioning it as a significant catalyst for not only autonomous vehicles but also humanoid robots.

Alternative Insights: Beyond the Conventional Metrics

Shifting the lens toward alternative data provides a more nuanced view of Tesla’s standing. Our AI score, an indicator of stock performance, has seen a nearly 50% decline for Tesla since June, now sitting at 33 out of 100. This dip, indicative of a sell signal, highlights the importance of considering unconventional data for a well-rounded analysis of Tesla's market stance. Investors who shorted the company as the AI score dwindled in September could have realized over a 20% gain on that position.

Let’s look at what caused this dip.

The app downloads for Tesla’s mobile applications have been on a decline over the last three months, despite a year-over-year increase. This decline, albeit 7%, could be signaling a saturation point in user growth, which might impact the stock’s attractiveness to growth-focused investors. Social media engagement, too, reflects a similar story with Tesla gaining a meager 0.2% new followers on Instagram, unlike its competitors Ford and General Motors who have seen more substantial growth.

In addition, employee satisfaction and business outlook ratings, although relatively high, have seen a minor decline, hinting at possible internal challenges. However, amidst these concerning indicators, web traffic to Tesla’s official website surged by 60% year-over-year, showing a continued interest and potential customer base expansion. Moreover, a 31% year-over-year increase in patents indicates a strong innovation trajectory which could be a harbinger of long-term growth.

Short-term Hurdles vs Long-term Potential

Tesla's journey through the present challenges necessitates a nuanced analysis from both conventional and alternative data lenses, aiding investors in making well-informed decisions based on a thorough understanding of the company’s trajectory.

The juxtaposition of short-term and long-term indicators reveals a scenario of near-term volatility against a backdrop of promising long-term prospects driven by continuous innovation and solid market positioning. Currently, our algorithm leans towards a sell signal on Tesla's stock, attributing this stance to an accumulation of negative signals, thereby suggesting a cautious approach in the near term.

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