Tesla investor says Elon Musk

Tesla investor says Elon Musk

Elon Musk

Tesla, Inc. (NASDAQ:TSLA) shares plummeted last week following the electric vehicle giant’s disappointing quarterly results and management’s commentary on a recent earnings call. One Tesla investor said Elon Musk missed an opportunity to assuage the concerns of investors.

What Happened: Tesla investors are losing confidence in the company’s long-term growth trajectory and fear that further price cuts could be coming soon, said Future Fund Managing Partner Gary Black. Future Fund’s flagship exchange-traded fund, the Future Fund Active ETF (NYSE:FFND), has Tesla as its second-biggest holding.

Macro factors are a minor factor that Elon overplayed on the earnings call,” Black said. Tesla EV monthly payments were now lower than they were 12 to 18 months ago, given the lower prices, he noted.

Black said that management should be using other tools in the marketing mix, besides pricing, to accelerate the world’s transition to sustainable energy. The company’s focus now should be on accelerating EV adoption and executing on specific Tesla growth initiatives, he said. The Cybertruck launch, Model 3 Highland, full-self driving Level 4 autonomy, next-gen $25,000 EV are among those initiatives, he added.

“We didn’t hear much about how TSLA plans to drive EV adoption and these growth initiatives on the earnings call,” Black said.

Why It’s Important: The macroeconomic uncertainty is likely to be a headwind in the near term as inflation continues to stay elevated and geopolitical tensions continue to rage. Tesla has gone back to price cuts as the only option to counter the economic unease.

The price cuts have not produced the desired result of lifting volume and instead pushed back purchases, as customers wait in anticipation of further price cuts. Additionally, Tesla’s used-car prices have fallen precipitously.

Black is among the analysts who have been clamoring for Tesla to spend on advertising, arguing that “potential EV buyers are very confused or, at best, ignorant about EV charging convenience, range, lower upfront and operating costs, OTA updates, near autonomy, safety, and owner satisfaction.”

A $100 million education campaign with Tesla as a “product hero” targeted at existing ICE owners would produce a far greater return on investment than an additional $50 per unit price cut, Black said.

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