Tesla: The Santa Rally's Gift to Investors

As the year comes to a close, investors are eagerly anticipating the annual Santa Rally, a phenomenon that typically boosts stock prices in the final weeks of the year. In this article, we'll explore how Tesla, Inc. (NASDAQ:TSLA) could be a significant beneficiary of this rally, driven by its Q4 delivery numbers and the broader market trends.



Tesla's Recent Performance and Valuation

Tesla's stock price has been on a rollercoaster ride in 2024, with the company facing various headwinds, including competition, macroeconomic challenges, and Twitter distractions. However, despite these hurdles, Tesla has managed to maintain its profitability relative to its EV peers. As of its last close, TSLA was trading at around $110, down nearly 75% from its November 2021 highs. This significant decline has led to a more attractive valuation, with Tesla's NTM P/E ratio falling to 20.3x and its NTM PEG ratio dropping below 1x.



The Santa Rally and Tesla's Q4 Delivery Numbers

The Santa Rally, a seasonal trend that typically boosts stock prices in the final weeks of the year, could provide a significant tailwind for Tesla's stock. As investors look for opportunities to capitalize on this phenomenon, Tesla's Q4 delivery numbers will be a crucial factor in determining the company's short-term performance.

Tesla is targeting unit delivery growth compared to 2023, which requires a record-setting fourth quarter. If Tesla achieves this, it will indicate strong demand for its vehicles and potentially higher revenue in 2025. A strong performance in China could offset weakness in Europe and the U.S., further boosting Tesla's revenue and profitability.



Tesla's Competitive Landscape and Long-term Growth Prospects

Tesla's competitive landscape in China is dynamic and includes both local and international rivals. The company's long-term growth prospects in the region are influenced by several factors, including the presence of these competitors, government policies, and market trends. Local rivals such as Xpeng (XPEV), NIO (NIO), and BYD (BYDDF) have been gaining traction in the market, while international competitors like Volkswagen (VWAGY) and General Motors (GM) have also been expanding their EV offerings.

However, Tesla's competitive edge in technology, pricing, and branding, coupled with its ability to adapt to changing government policies and market trends, positions the company well for long-term growth. The recent collapse in Tesla's stock price has likely priced in significant headwinds, making the company's valuation more attractive to investors.

Investment Action Plan: The Stock Market Santa Rally, Pt. 2 (Tesla Deliveries)

As we approach the Santa Rally, investors should consider the following steps to capitalize on the potential boost in Tesla's stock price:

1. Monitor Tesla's Q4 delivery numbers: Keep a close eye on Tesla's Q4 delivery numbers, as they will be a crucial factor in determining the company's short-term performance and long-term growth prospects.
2. Evaluate Tesla's valuation: With the recent decline in Tesla's stock price, the company's valuation has become more attractive. Investors should assess whether Tesla's NTM P/E ratio and NTM PEG ratio provide an entry point for long-term investment.
3. Consider the broader market trends: The Santa Rally is a seasonal trend that typically boosts stock prices in the final weeks of the year. Investors should be aware of this phenomenon and position their portfolios accordingly.
4. Diversify your portfolio: While Tesla may be an attractive investment opportunity, it's essential to maintain a diversified portfolio to mitigate risk. Consider allocating a portion of your portfolio to Tesla while maintaining exposure to other sectors and asset classes.

In conclusion, the Santa Rally could provide a significant tailwind for Tesla's stock price, driven by the company's Q4 delivery numbers and the broader market trends. As investors look for opportunities to capitalize on this phenomenon, they should closely monitor Tesla's performance and evaluate the company's valuation. By following these steps, investors can position themselves to benefit from the potential boost in Tesla's stock price during the Santa Rally.