The similarities between Tesla Inc's (NASDAQ:TSLA) stock performance this year compared to 2019 are "striking," The Future Fund LLC managing partner Gary Black said on Friday, throwing caution to short sellers.
What Happened: Similar to how Tesla was gearing up to launch the Model Y in 2019, the company is now planning new vehicles, including more affordable models, with the start of production slated for the first half of 2025.
In 2019, Tesla shorts believed that the Model Y was just a larger Model 3 and would grab market share of the Model 3, Black said. "In hindsight the shorts failed to realize Model Y vaulted TSLA into the hot-selling CUV category where it quickly become the #1 seller," he added. Model Y is currently Tesla's best-selling vehicle.
Likewise, in 2025, the new affordable model of Tesla will increase Tesla's total addressable market, Black said.
"Shorts again wrongly believe the TSLA compact will cannibalize Model 3, even though Model 3 competes in the affordable sedan segment. As with Model Y, TSLA will sell every TSLA Compact it makes, and earnings estimates will again run ahead of the stock price as they did in 2020, pushing the stock price higher," Black wrote.
$TSLA similarities between 2019 and 2024 are striking. $TSLAQ shorts should listen up.
— Gary Black (@garyblack00) September 20, 2024
In 2019, TSLA was gearing up for launch of the Model Y, a CUV that would essentially double TSLA TAM. The shorts believed Model Y was just a bigger Model 3 and thought erroneously that Model... pic.twitter.com/QHpvD0h8O9
Tesla boomed in 2020 upon the release of the Model Y, Black noted, while adding that the same phenomena of positive earnings revisions driving the stock price higher could occur in 2025 when the more affordable vehicle is released.
Why It Matters: Tesla said during its second-quarter earnings report that the upcoming affordable vehicle will be able to be produced on the same manufacturing lines as its current vehicle lineup. The company has yet to provide a price range or details on its new affordable vehicle but Black believes it would be priced between $25,000 and $30,000.
The Model 3 is currently the cheapest offering from Tesla. Its cheapest version starts at $38,990 in the U.S.
Tesla stock closed down 2.3% at $238.25 on Friday. The stock is down about 4% year-to-date, according to data from Benzinga Pro.
Check out more of Benzinga's Future Of Mobility coverage by following this link.
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