Additionally, TSLA's strong cash flow and negative net debt on the balance sheet are positive indicators of the company's financial health. TSLA's revenue has achieved a CAGR of 5.1% from FY 2019 to FY 2022, significantly higher than GM's 5.5% and F's 1.2%. Cautiously Optimisticĭespite disappointing Q1 results, the company's auto gross margin has shown significant improvement, rising from 21.2% in FY 2019 to 28.5% in FY 2022, surpassing General Motors' ( GM) 18.9% and Ford's ( F) 16.2%. Therefore, I maintain a neutral view on Tesla stock and wait for a consolidation to occur that balances the potential growth slowdown with the high valuation. Secondly, given the concerns about growth deceleration and margins contraction in the face of a demand slowdown and further price reductions, it's necessary to discount its valuation accordingly. Firstly, despite the highly competitive EV industry, Tesla's growth potential and margins are currently higher than its peers, which can justify higher-than-peers valuation multiples. There are two important factors to consider. Additionally, they don't want to miss out on any significant rebound like the one seen in 2021. While they are concerned about its valuation multiple (currently trading at 49x P/E TTM) despite a more than 50% drawdown from its 52-week high, they believe that TSLA's secular growth tailwinds remain intact. Investing in Tesla presents a dilemma for many investors. However, the stock has largely recovered and is currently range-bound. ( NASDAQ: TSLA) shares dropped by more than 10% after its Q1 results due to weak revenue growth and margins contraction caused by the company's ongoing vehicle price reductions.
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