Tesla's Margins Shrink, Discounts Rise: Analysts Sound Alarm

Ladies and gentlemen, buckle up! We're diving headfirst into the electric vehicle market, where Tesla's once-unassailable throne is starting to wobble. Analysts Gordon Johnson and Jim Chanos are sounding the alarm, and investors are taking notice. Let's break it down, point by point, because this is a story you won't want to miss!



First, let's talk about the elephant in the room: Tesla's margins. They're imploding, folks! Gordon Johnson, the sharp-tongued analyst from GLJ Research, is calling it like he sees it. "Tesla's margins are imploding," he declared on social media platform X. "It offers new discounts to move metal nearly daily." This is a company that was once the darling of Wall Street, but now it's struggling to keep its head above water.

And the discounts? They're not just a one-off thing. They're becoming a regular occurrence, and that's a red flag, my friends. Johnson's analysis suggests that Tesla trades at 127x 2025 estimated adjusted earnings per share, compared to the Magnificent Seven tech stocks’ average of 32x. That's a massive discrepancy, and it's not a good sign.

But it's not just about the margins. Tesla's brand and market share are collapsing across global markets, including China, the United States, Europe, Canada, and Australia. Johnson's analysis suggests that Tesla is not truly a tech stock, with approximately 90% of its revenue derived from automobile sales. This is a company that's been riding high on its tech stock status, but now it's time to face the music.

And the music is not pretty. Tesla's stock has declined 30.4% since 2022, while the S&P 500 has increased 20.2% during the same period. That's a massive divergence, and it's a clear indication that investors are losing faith in Tesla's ability to deliver.

But it's not all doom and gloom. There are still opportunities out there, and Tesla is one of them. The company's upcoming first quarter of 2025 delivery report is anticipated to provide further insight into the company’s current market performance, with investors closely monitoring potential indicators of the company’s strategic direction and financial health.

So, what's the takeaway? Tesla is facing some serious challenges, but it's not all bad news. The company still has a lot of potential, and it's up to investors to decide whether they're willing to take the risk. But one thing is for sure: Tesla's margins are shrinking, discounts are rising, and the market is taking notice. It's time to pay attention, folks, because this is a story that's far from over.