Betting On Three EV-Makers
The first one is the most obvious one, Tesla (TSLA 0.00%↑). Its shares are down about a third year-to-date (YTD). First it missed its Q4 earnings, and then it posted an 8.5% year-over-year decline in 1st quarter deliveries, driven in part by shutdowns of its Giga Berlin factory. Tesla shares were trading at close to $250 at the end of 2023; our bet below is that they’ll be trading at over $205 next January, and if we’re right, we’ll make a ~200% gain.
The second one is a less well-known American EV manufacturer whose shares are down more than 50% YTD, for similar reasons as Tesla (lowered sales projections for this year). And yet, I’ve gone from seeing none of their vehicles locally to seeing three in the last week or so, including one of their pickup trucks yesterday. For years, when Tesla bears talked about the company going bust, one thing that convinced me they were wrong was the number of Tesla cars I saw kept going up. It’s gotten to the point where they’re ubiquitous where I live, in Bergen County, New Jersey, just across from New York City. Seeing this other American EV maker’s vehicles seems auspicious for them. Unlike Tesla, this one is currently losing money, but it’s also a lot cheaper than Tesla on an Enterprise Value/Sales basis. As with Tesla, we’re betting on a partial recovery in the company’s stock by January (partial meaning considerably less than what it was trading for at the end of last year).
The third EV maker is Chinese and is, in addition to an EV play, a bet on the Chinese economy and a partial hedge on our Tesla bet, as this company is undercutting the price of Tesla’s Model 3 in China.
Details below.
Bullish EV Trade #1
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