Tesla Bull recommends ‘great deal’ for Elon Musk

Tesla Bull recommends ‘great deal’ for Elon Musk

  • Tesla’s volume growth has slowed ever since higher interest rates began to bite consumers.
  • As delivery growth slowed and price cuts eroded margins, the stock began to nose-dive and it is now the worst-performer S&P 500 stock.

A well-known Tesla bull and Future Fund’s Managing Partner, Gary Black, on Wednesday reiterated his views that advertising can jumpstart Tesla Inc.’s sagging volume growth.

What Happened: A social-media user referred to a Tesla influencer’s post about the Elon Musk-led company handing over Cybertrucks to celebrities on priority over customers who preordered before them. The influencer said these celebrities with huge social-media following offer free advertising to the vehicle when they pose pictures with it and also potentially drive traffic to Tesla’s website. These people in turn will see the merits of the rest of Tesla’s products, he said.

Tagging Black, the X user who shared the Tesla influencer’s post, said, “I think it’s okay to currently be in a time period where for the first time ever if your products are that damn revolutionary. You can get away with spending $0 on ads.”

Replying to him, the fund manager said Tesla could do both. “Why not do both? Get celebs and athletes to show off the Cybertruck for free, plus advertise your other products to expand your TAM to non-EV users?” he said.

“$100M in ad spend in lieu of $1B in price cuts seems like a great deal for $TSLA.”

Why It’s Important: Tesla’s volume growth has slowed ever since higher interest rates began to bite consumers. The strategy the company devised to reinvigorate volume backfired. The series of price cuts Tesla announced since the start of 2023 did not produce the desired effect of lifting volume and instead eroded margins.

Hurt by this double whammy, the stock has been under pressure since the start of 2023. It has fallen over 31% year-to-date. More importantly, analysts do not expect a reprieve until the company launches a sub-$30,000 vehicle.

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