TESLA: MORE ROOM FOR GROWTH?

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Technicals

Looking at the 4H chart we can see a megaphone pattern formed with the priec hovering in the middle. It is currently in neutral play for the short term. For it to be determined to be bullish or bearish a breakout at either side has to occur. Megaphone patterns present two trading opportunities: Trading the breakout as a megaphone continuous pattern and trading the reversal as a megaphone reversal pattern. Trades are placed after price reverses from the 5th swing pivot level.

Megaphone Continuous Trade Example (Scenario 1)

The 5th swing will either serve as a breakout or a support or resistance.

Megaphone Reversal (Scenario 2)

If support/resistance holds at the 5th point a reversal may be underway, however a breach of the 3rd point has to occur to be confirmed.

Fundamentals

After Tesla splendid year 2020 rally of an incredible 695% in 2020, Tesla isa now one of the most valuable companies in the world and the most valuable automaker in the world. With a market capitalisation of $810.6 billion at time of writing, Tesla is worth more than the next 5 largest automakers combined, which includes world renowned brands such as Toyota and Volkswagen. That rally has propelled Elon Musk to the throne and title of the world's richest man, with a net worth of $US 202 billion at the time of writing.

Wall St has many times called out Tesla's stock price rise a "bubble", "unsustainable" and "fraud", but yet Tesla managed to overcome these negative comments and caused the shorts to lose over US$35 billion. To put that into perspective, the entire US airline industry lost a combined amount of $24.2 billion in year 2020.

The main reason for Tesla's meteoric rise is largely attributed to the fact that Tesla has finally became profitable. For 2020, Tesla reported a profit of $721 million on about $31.5 billion in sales, supported by the increase in deliveries and higher revenue from regulatory credits. That compares with an $862 million loss and sales of $24.6 billion in 2019. This is due to the increased number of sales deliveries which Tesla delivered 499,550 vehicles in 2020, rising 36% year on year, according to the company's latest quarterly report.

Another important factor is the promise of full self driving (FSD) and its robotaxi network. With the promise of its $25,000 vehicle slated to release in 2021, it will fundamentally change the market dynamics of the EV industry and be a game-changer in the the taxi service industry as well. With FSD and the projected standard range of at least 300 miles or 482 km, the robotaxi will bring in stable and constant cash flow for Tesla. A fully autonomous robotaxi doesn't require a human to operate, thus reducing operating expenses and this will translate to cheaper fares for consumers.

According to a report by venture capitalist Gene Munster, managing partner of Loup Ventures, Tesla is 3-5 years ahead of legacy auto manufacturers in the field of FSD. Assuming a 3 years advantage and a release this year according to its latest earnings report, Tesla will have 100% of the market share for 3 years, followed by a competitive advantage as in that 3 years, Tesla can continue to refine, update and improvise its FSD service.

Currently, Tesla is ranked as the world's best-selling plug-in and battery electric passenger car manufacturer in 2019, with a market share of 17% of the plug-in segment and 23% of the battery electric segment. With a expected CAGR of 21.1% till year 2026 according to Fortune Business Insights, and the Biden administration's climate plan pushing for wide US adoption of EV vehicle, we expect Tesla to grow tremendously in the coming years.

Conclusion : Based on the Technicals we are bullish to neutral. However upon examination of the fundamentals we are bullish on the stock if RoboTaxis and Full Self Driving are achieved.