Nasdaq 100 Analysis: Tesla stock rises as it plans to advertise cars

Key takeaways

• Tesla shares are climbing higher in wake of its annual general meeting
• Elon Musk denies claims he plans to step back from Tesla CEO role
• Tesla plans to start advertising its cars for the first time in the hopes of reinvigorating demand
• Musk stresses affordability of Tesla cars following price cuts
• Cybertruck and Roadster to rejuvenate product lineup, with two new mass-market models under development
• Tesla’s artificial intelligence efforts to have ‘ChatGPT moment’ this year or next

Tesla stock rises after AGM

Tesla shares are up 1.3% in early trade this morning following the company’s annual general meeting yesterday.

Let’s have a look at some of the key takeaways from yesterday’s meeting…

Elon Musk to remain as Tesla CEO

One of the biggest questions being discussed by investors ahead of the AGM was what Elon Musk will do with his time as he steps back from social media platform Twitter.

Former advertising lead at NBCUniversal, Linda Yaccarino, is due to takeover as CEO to run day-to-day operations at Twitter in five to six weeks’ time, leaving Musk focused on the bigger picture. However, some media reports had suggested he could also formally step back from Tesla and instead focus on his other ventures. We already know that the rest of the Tesla board has talked about succession plans because Musk is such a formidable player at the company.

Musk denied he was planning to relinquish the CEO role at Tesla when asked by an investor during the meeting. He said there was a ‘short-term distraction’ at Twitter as he ‘had to do major open-heart surgery’ to ensure the platform could survive, but clarified that the social media platform was now stable and that the amount of time he will need to spend working on the platform is ‘relatively small compared to the last six months’.

That has raised hopes that Musk will have more time to spend on Tesla at a critical time for the electric carmaker, which is grappling with softer demand, lower profitability and more intense competition.

Tesla to begin advertising to drum-up demand

Musk also announced that Tesla will ‘try a little advertising and see it how it goes’, marking a change in stance considering Tesla has refused to market its cars before and has relied on word-of-mouth and its loyal fanbase.

‘It’s worth a try and we’ll see how effective it is,’ Musk said in a subsequent interview with CNBC. ‘I only just agreed to it so its not a fully formed strategy yet’.

That shows that Tesla is being forced to re-evaluate its strategy and suggests demand remains soft. Musk reiterated that Tesla is feeling the pressure from the macroeconomic environment like other companies and said ‘I expect things to be, just at a macro economic level, difficult for at least the next 12 months’. Marketing its cars could widen the pool of prospective buyers beyond its fanbase and help it push its message that electric cars are now an affordable.

The managing partner of Future Fund, Gary Black, welcomed the news after calling on Tesla to advertise. ‘Elon finally realised that Tesla shareholders overwhelmingly preferred that some dollars in the pricing/marketing budget be allocated to educating non-EV users on the benefits of EV,’ he tweeted. ‘They do this right, it could be amazingly successful. I’m convinced most people have no idea,’ replied Gerber Kawasaki, from fellow investor Wealth & Investment Management.

The decision to advertise could also see Musk wield the power of Twitter to push Tesla vehicles, especially as the social media platform has lost some advertisers in the wake of his takeover.

Tesla cars are more affordable in the US

Tesla rocked the markets earlier this year when it announced that it was prioritising growth over profitability and would continue to bring prices down to drive demand. We have seen Tesla recently make mild price increases to several models, but they all remain much cheaper today than they did at the start of 2023.

Musk, speaking to CNBC, said ‘a lot of people still think Teslas are super expensive’ despite it shifting toward less expensive sedans and SUVs since starting-out as a company focused on pricier sports cars.

‘But now we’re at the point where the starting point of a Tesla is actually below the average selling price of a car in the United States,’ Musk said. ‘A Tesla is actually more affordable than people realise’.

For context, the average price of a new car in the US stood at over $48,000 in March, according to price advisor and research firm Kelley Blue Book. Meanwhile, the Model 3 currently starts at just over $40,000 while the long-range Model Y starts at $50,490.

Tesla has new models in the pipeline

Tesla has faced pressure to rejuvenate its product pipeline as smaller startups and traditional automakers introduce a flurry of new cars and models to the market. Tesla last introduced an entirely new car back in 2019 when it launched the Model Y. Although it has continued to update its existing models and has launched the Tesla Semi lorry, pressure has been building on the pipeline of new models.

With that in mind, Musk provided hopes that Tesla has several new vehicles and models in the works.

We know that the next addition will be the long-awaited Cybertruck that has faced several delays considering it was originally supposed to hit the market back in 2021! Musk said the first Cybertrucks should be delivered before the end of 2023 and outlined plans to produce up to 250,000 of them each year, depending on the level of demand.

The CEO also said that Tesla should complete development of its revamped Roadster, which was the first car Tesla introduced way back in 2008, before the end of 2023 with production poised to begin in 2024.

Musk also mentioned that Tesla is working on two new models targeted at the mass market, suggesting we could see more models unveiled in the coming years to refresh its product lineup.

Is Tesla an AI stock?

Musk was also asked by CNBC about the future of artificial intelligence, with the CEO suggesting Tesla could be a major player.

‘Tesla has actually tremendous capabilities in real world AI,’ he said, adding that it is ‘far ahead’ of competitors and leading the race. ‘I’m not even sure who is second, frankly.’

When asked why the markets were so focused on discussing the AI potential at companies like OpenAI, Microsoft and Alphabet, Musk said he expected Tesla ‘will have a sort of ChatGPT moment, if not this year then I would say no later than next year’.

When asked to elaborate, Musk said there will be a point when the three million Tesla vehicles on the roads will be ‘able to drive themselves with no one’, stating that figure will grow as more cars are sold. That is in reference to its autonomous driving efforts, although its Full Self-Driving capabilities have not developed as fast as expected. Musk has previously said that unleashing self-driving software on its vehicles could transform Tesla.

Where next for TSLA stock?

Tesla shares are up 1.3% at $168.70 in premarket trade but they remain in the downtrend that can be traced back to the middle of February. The stock would need to sustain a move above $170 to move back above the middle of the downtrend before it can look to test the upper resistance currently sat at around $194. A break above here would be bullish for the stock.

Notably, brokers think there is limited upside potential considering they have an average target price of $181.20 on the stock, suggesting it could struggle to make a positive breakout of the current downtrend.

On the downside, we could see Tesla shares sink to as low as $147 and test the supportive bottom of the downtrend but any move below here could provide a new bearish signal and bring the lows we saw in January back onto the radar.

Take advantage of extended hours trading

Most traders must wait until markets open before being able to trade Tesla shares. But by then, the news has already been digested and the instant reaction in share price has happened in after-hours trading. To react immediately, traders should take their positions in pre-and post-market sessions.

With this in mind, you can take advantage of our service that allows you to trade Tesla and other stocks using our extended hours offering.

While trading before and after hours creates opportunities for traders, it also creates risk, particularly due to the lower liquidity levels. Find out more about Extended Hours Trading.