- Tesla Inc (TSLA) shares continued their April slide, closing down again last Friday
- TSLA stock ended up shedding 24% of its value in April
- A great deal of the loss is attributable to CEO Elon Musk’s Twitter (TWTR) acquisition drama, opening an opportunity for investors to by TSLA stock on the cheap
Tesla Inc (NASDAQ:TSLA) stock ended April with an $870.76 close, putting its loss for the month at 23.98%. That’s a very poor showing, even for 2022. The natural inclination might be to avoid a stock with such a poor performance. However, this is Tesla. You always need to be watching for openings.
The big TSLA stock loss for April can be laid squarely at the feet of Tesla CEO Elon Musk. Not for any decisions he’s been making at Tesla, but because of the drama surrounding Musk’s epic quest to purchase Twitter Inc (NYSE:TWTR). In the most recent developments on that front, Tesla stock dropped 12% on April 26, after Twitter accepted Musk’s buyout deal. Friday’s drop was minor in comparison, but came as the market reacted to news Musk had sold $8.4 billion in TSLA stock to help finance the deal.
All of this distraction over Twitter has been bad news for Tesla stock. However, it has created a unique opportunity for investors to snap up shares of TSLA stock at a steep discount.
| TSLA | Tesla | $916.83 |
Tesla’s Q1 Shows the Company Is In a Strong Growth Position
April’s dramatic drop in TSLA stock has happened despite the company posting very strong first-quarter earnings. The good news for shareholders started on April 2. Tesla released its first quarter 2022 vehicle production and delivery numbers. There had been worry that supply chain issues might derail the company’s production. That wasn’t the case. Despite those challenges, Tesla reported producing over 305,000 new EVs, and deliveries of over 310,000 for the quarter.
In comparison, the first quarter of 2021 saw the company produce 180,000 vehicles and deliver 185,000. This year’s numbers represent a nearly 70% increase in production and a 68% increase in deliveries.
On April 20, Tesla followed that up with its first quarter 2022 earnings. The company beat analyst expectations on both the top and bottom lines. Revenue of $18.76 billion, up 81% year over year. Adjusted earnings per share of $3.22 were far over the $2.27 analyst had been expecting. In addition, the company grew its profit margins — no small feat when inflation is driving the prices of components through the roof.
In response to the strong first-quarter earnings report, TSLA stock popped the next day. The rally was short-lived, though, as the market reacted to Elon Musk’s ongoing Twitter drama.
One New Concern, But It Should be Temporary
The month of May has started off with one potential worrying sign and this time it has nothing to do with Twitter.
It was reported on the weekend that multiple Chinese EV manufacturers saw their April deliveries slashed. The cause for the dramatic drop in production was Covid-19 lockdowns that have worsened supply chain disruption. Some electric vehicle (EV) production facilities have been hit by temporary lockdowns as well.
China is the world’s largest car market and it’s critical to Tesla’s success. Last year, the company’s Shanghai Gigafactory produced nearly 475,000 vehicles. Those EVs were destined for the Chinese market, with some being exported to Europe.
Any news about Covid and increased supply chain disruption in China is going to be a concern for Tesla. Fortunately, any impact this might have on production is going to be temporary. The big picture for Tesla in the Chinese market will remain positive.
Bottom Line
Given the extended slump that TSLA stock has experienced all through April, should you avoid it? Especially now that there are concerns about disruption in the Chinese market?
On the contrary, if you have been thinking about adding shares in this EV superstar to your portfolio, now would be the perfect time. TSLA stock has been significantly discounted in April, and it’s due primarily to the Elon Musk and Twitter — a distraction that will eventually go away. Even if TSLA ends up taking a hit over the news out of China, that will also be temporary.
The bottom line is that TSLA stock has been a performance machine, especially over the past two years. Battery-powered cars are going mainstream and Tesla is continuing its dominance of the market. TSLA earns an “A” rating in Portfolio Grader, and it is well-positioned to deliver long-term growth.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
