If you go shopping for a couch or a car, you target ones that are on sale. 

So why wouldn't you do the same for ASX shares?

For those who are still scared of buying into stocks that have fallen in price, here's a couple of recommendations that might change your mind:

'The shares are trading at a discount'

Even though Lynas Rare Earths Ltd (ASX: LYC) is the only major producer of rare earth minerals outside of China, the stock price has taken a 17.8% dive over the past month.

If you go back six months, the shares have taken a painful 21.8% haircut.

According to Catapult Wealth portfolio manager Tim Haselum, recent news from the world's largest electric car marker sent a scare through investors.

"In our view, Tesla Inc (NASDAQ: TSLA) announcing a plan to eliminate rare earths from next generation electric vehicles… impacted the share price," Haselum told The Bull.

"But we believe investors over-reacted to the Tesla news, given continuing demand for rare earths. Consequently, we believe the shares are trading at a discount."

Shaw and Partners portfolio manager James Gerrish said pretty much the same last week.

"Tesla, and EVs in general, are just one of many demand sources of rare earth materials."

Haselum also felt like reporting season last month didn't flatter the Lynas Rare Earths.

"The company posted higher revenue in the first half of fiscal year 2023, but the cost of sales also rose," he said.

"The company also experienced water supply disruptions at its Malaysian plant."

'A strong track record of compound sales growth'

Xero Limited (ASX: XRO) shares lifted 10.5% in a single day last week after its new chief executive announced plans to slash costs and focus on profitability.

However, the stock is still almost half what it was in November 2021.

Haselum thus sees a golden buying opportunity at the moment.

"This accounting software provider is trading at a discount to prior earnings multiples since the price has fallen from its highs," he said.

"The company has a strong track record of compound sales growth and penetrating key markets… We consider Xero a top quality company."

This week Xero shares took another dive due to the collapse of Silicon Valley Bank, which had substantial clientele in the US tech industry.

However, the New Zealand software company assured investors that it has no "material exposure" to the failed institution.

"As at 10 March 2023, Xero's total exposure to Silicon Valley Bank was approximately US$5 million, reflecting Xero's local transactional banking relationships with SVB in the US and UK," the company announced to the ASX.

"That amount represents less than 1% of Xero's cash and cash equivalents as at September 30 2022."

The post 'Top quality': Expert picks 2 ASX 200 shares to buy at a nice discount appeared first on The Motley Fool Australia.

ASX rare earths shares including Lynas Rare Earths Ltd (ASX: LYC) shares and Arafura Rare Earths Ltd (ASX: ARU) shares have had a tough trot of late.

Since the start of the month, the Lynas share price has dipped by 9.2%. It hit a new 52-week low of $7.26 on Tuesday. Today, Lynas shares are trading for $7.45.

The Arafura Rare Earths share price is up 0.8% since 1 March but has endured a rough ride. The stock fell 8.3% over the first three days of trading in March before recovering to 60 cents per share today.

The cause of this drama for Lynas and Arafura and fellow ASX rare earths shares?

That'd be Tesla Inc (NASDAQ: TSLA).

On 1 March the global electric vehicle giant announced its next-generation EV motor won't contain any rare earths. 

But analysts at Adamas Intelligence reckon ASX investors' concerns over this news are 'overblown'.

Let's investigate.

How Tesla slapped down the Lynas share price

Adamas Intelligence is an independent research and advisory services company specialising in critical metals and minerals.

In commentary published on its website, Adamas says Tesla's decision to do away with rare earths motor magnets means it will likely use a ferrite magnet. This will make the cars heavier and less efficient.

Traditional EVs use magnets created with a rare earths alloy of neodymium, iron, and boron (NdFeB).

Adamas points out that Tesla's primary goal is to create cars with a high performance-efficiency balance. So the company's decision to abandon NdFeB magnets is surprising.

Tesla justified the change by saying it anticipates problems with rare earths supply. It's also worried about the environmental and health impacts of mining the minerals.

But as Adamas points out, China has been the world's primary supplier of rare earths. New suppliers are now emerging whose operations are less environmentally damaging due to stricter regulation.

Adamas says:

Today, there are more supply options than just China/Myanmar and others on the cusp of starting production – options that are transparent, close to home (for Tesla in particular) and substantially less impactful on the environment than the China production of yesteryear.

Currently, Lynas is the only significant separated rare earths producer of scale outside China.

Implications of Tesla's decision 'expected to be minor'

Adamas says its own research indicates just 12% of global NdFeB magnet consumption in 2022 was for EV manufacture.

Of that 12%, Telsa makes up 15% to 20%. That makes its overall contribution to global NdFeB magnet demand (excluding micromotors, sensors and speakers) just 2% to 3%.

So, even if Tesla were to dump NdFeB motors across its entire fleet, "the global NdFeB market stands to lose a mere 2% to 3% of demand in the near-term, and maximum 3% to 4% over the long-term assuming Tesla maintains its EV market leadership".

Adamas concludes the implications for the global NdFeB market are "expected to be minor".

Market reaction 'largely overblown'

Adamas says:

The media and market's reaction to the news has been largely overblown, speaking to a broad misunderstanding of the NdFeB market's supply and demand fundamentals.

Looking forward to 2035, Adamas forecasts that global demand for NdFeB magnets will triple while global production will only double, constrained by long lead times to bring online new rare earth oxide production.

In relation to the magnitude of the expected supply gap, a 3% to 4% drop in demand by 2035 would go virtually unnoticed.

Top broker Bell Potter also describes the sell-off in ASX rare earths shares as a 'knee-jerk reaction'.

The broker says the world will still need a materially increased supply of rare earths no matter what Tesla does.

The post Tesla-induced sell-off of ASX rare earths shares like Lynas overblown: experts appeared first on The Motley Fool Australia.

A year or two ago, Lynas Rare Earths Ltd (ASX: LYC) shares enjoyed a rapid ascent as the market recognised the business as the only major producer of rare earths outside of China.

To boot, rare earths were a critical ingredient in batteries for electric vehicles, which are enjoying a surge in popularity.

However, the Lynas share price has crashed almost 20% over the past month. In fact, the stock has languished over the past 12 months, losing more than 26%.

So what is happening? And is it still a stock worth buying?

Rare earths market has been shaken up

According to Shaw and Partners portfolio manager James Gerrish, an announcement from a major buyer of rare earths shook up producers recently.

"The rare earths market has been volatile this week on the back of Tesla Inc (NASDAQ: TSLA) announcing plans to install permanent magnets in their cars to reduce the reliance on the expensive materials," he said in a Market Matters Q&A.

"Very little detail was provided on the plans and we think there is a lot of work to get through before this becomes a reality."

But this development did not worry Gerrish.

"Tesla, and EVs in general, are just one of many demand sources of rare earth materials," he said.

"We continue to like Lynas, the biggest player in the space outside of China."

Due to the geopolitical importance of its status as a rare producer in the first world, Gerrish noted Lynas enjoys government support from both Australia and the United States.

The share price drop in the past month and year merely presents an attractive entry point.

"While there are some risks around execution with the new Kalgoorlie plant, we think the market is taking a harsher view than what the company will deliver."

Lynas has plenty of fans

Gerrish is not the only professional with a positive outlook for Lynas Rare Earths.

The Motley Fool reported a fortnight ago that the analysts at Firetrail declared the stock as one of the best to buy for the next decade.

"To make batteries, we need lithium, rare earths, nickel, cobalt and copper," stated the team.

"We hold Lynas Rare Earths Ltd in our Australian portfolios."

Wilsons equities strategist Rob Crookston flagged last month that Lynas could even be an attractive takeover target.

"We are anticipating a robust year for resources stocks, which will include M&A activity as the sector undertakes growth and consolidation to take advantage of strong balance sheets after a bumper 2022," he said in a memo to clients.

"We believe the large major miners are looking to diversify towards EV minerals."

The post Lynas Rare Earths has plunged 20% in a month: Is it a buy? appeared first on The Motley Fool Australia.

The Novonix Ltd (ASX: NVX) share price has found itself on the back foot today. Today's move comes amid a handful of recent developments that could be acting as an anchor on investor sentiment.

As we head into the afternoon, shares in the battery technology company are down 6.3% to $1.49. This negative turn places Novonix's shares marginally above the 52-week low of $1.39. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is only a touch lower than yesterday.

Let's wade through what could be invoking the woeful performance today.

Pressure on to scale faster or lose tech moat

Tesla held its 2023 Investor Day this morning, providing insights into how the electric vehicle (EV) maker plans to procure the materials necessary to deliver on its ambitious goal of selling 20 million vehicles by 2030.

In the eyes of many, the shift to an electrified future has manifested concerns about a shortfall in the supply of lithium and other green metals. Yet, in Tesla's presentation, it was suggested there are ample estimated resources to meet the accumulative demand through to 2050, as pictured below.

Tesla Inc (NASDAQ: TSLA) CEO Elon Musk discussed the real crux of material constraints for the company, stating:

There also seems to be quite a bit of confusion about lithium — lithium is extremely common. It's one of the most common elements on Earth. There's no country that has a monopoly on lithium, or even close to it. There's enough lithium ore in the United States to electrify all of Earth. If the United States was the only place producing lithium, there's enough domestic material to electrify Earth.

The limiting factor is the refining of the lithium into battery-grade lithium hydroxide or lithium carbonate. That's the actual limiting factor.

However, Novonix isn't exactly a 'lithium share', as the company seeks to produce cathodes and anodes from synthetic graphite for use in lithium-ion batteries. Though, this area of the battery supply chain was also discussed during the presentation.

Musk discussed how Tesla is in the process of building its own cathode refining facility, stating:

We are obviously building a cathode processing facility just adjacent to this building […] that's for cathode refining. We'd really prefer it if others did that. We're doing it because we have to, not because we want to.

Furthermore, senior vice president of powertrain and energy engineering, Don Baglino, added:

There just really isn't any large-scale cathode production in the United States and it needed to be done.

This may highlight that Novonix is dragging its feet when it comes to spinning up production at scale. Adding to the issue, Baglino said they would share any process improvements with their supply partners.

Perhaps Novonix shareholders are concerned that Tesla could discover advancements that would minimise the company's competitive advantage.

What else is hitting the Novonix share price?

Novonix released its results for the six months ending 31 December 2022 on Tuesday. The statements showed a continued lack of meaningful revenues, at US$2.7 million for the period. For context, the company brought in US$6.1 million for the 12 months ending 30 June 2022.

The ASX-listed company also reported a US$27.86 million loss. That means Novonix's cash balance was widdled away even further during the half.

Following the result, Morgans moved Novonix shares to a hold with a $1.44 price target.

The post Why is the Novonix share price tumbling 6% today? appeared first on The Motley Fool Australia.

The share market moves around a lot. We, investors, know this, since enduring the volatility of the share market is one of the hardest parts of investing. But shares going up and down have more consequences than just the balances of our investment portfolios and super funds.

It more or less determines the richest people in the world. Billionaires typically don't keep their money in the bank. They invest in income-producing assets that compound wealth over time – no one saves their way to a billion.

Those income-producing assets could be property or private companies. But, more often than not, they are publically-listed shares. That is certainly true of the current five richest people in the world.

Elon Musk, CEO of Tesla, SpaceX, Twitter, Neuralink and The Boring Company, had an exceptionally rough year last year. Musk had the dubious honour of being the first human in history to lose US$200 billion in personal wealth last year.

This was largely driven by the collapse we saw in the Tesla share price, of which Mussk has a huge chunk of his wealth housed.

Tesla tanked by more than 65% in 2022, which led to LVMH's Bernard Arnault overtaking Musk as the world's richest person in the later months of last year.

But Arnault's spot at the top of the greasy pole wasn't to last.

Elon Musk is back as the world's richest person

Today, Elon has his crown back. After a brief stint of being only the world's second-richest person, Musk has just reclaimed his gold medal. And he can thank Tesla stock, that same company that put such a big dent in his net worth last year.

While Tesla stock cratered in 2022, it has seen a shocking renaissance in 2023 thus far. Since 6 January, the Tesla stock price has risen by a whopping 85%, going from US$113 to the US$207.63 it is commanding today.

This has catapulted Musk back up to the top of the rich list. According to the Bloomberg Billionaires Index, today, Musk's fortune stands at US$187 billion. That's just ahead of Arnault's US$185 billion.

Here's a list of the top five richest people, their fortunes as they currently stand, and the companies they are associated with:

So we'll have to wait and see how long Musk's stint as the world's richest person lasts this time.

The post Surging Tesla share price propels Elon Musk to world's richest person again appeared first on The Motley Fool Australia.

The Magnis Energy Technologies Ltd (ASX: MNS) share price is soaring on news it has signed a three-year offtake deal with Tesla Inc (NASDAQ: TSLA).

The ASX lithium share opened at 49 cents, up 22.5% on Friday's closing price, and is now at 47.5 cents.

The lithium-ion battery technology and materials company requested a trading halt before the market open yesterday pending the announcement.

Small-cap ASX lithium share gets a big customer

Magnis has entered into a binding offtake agreement with Tesla for the supply of anode active materials (AAM) from February 2025.

Tesla has committed to purchasing a minimum 17,500 tonnes per annum (tpa) with the option to buy up to 35,000 tpa for a minimum three-year term at a fixed price.

The deal was signed over the weekend. It is conditional on Magnis securing a location for its commercial AAM facility by 30 June. It also has to start production at a pilot plant by 31 March 2024.

Production at the commercial facility needs to be underway by February 2025. The agreement is also subject to customer qualification.

This is big news for the ASX small-cap, with the company describing it as a "material transaction".

Magnis Chair Frank Poullas commented:

We are really excited to bring our high performing AAM to market that requires no chemical or thermal purification throughout the whole process, which differentiates this sustainable material in the market and provides great value to all parties."

What's next for the Magnis share price?

The Magnis share price has been rising, up 25% in the year to date following today's news. This compares to a 5.5% bump in the S&P/ASX All Ordinaries Index (ASX: XAO).

Magnis has commenced large-scale development of its pilot plants for both AAM and graphite concentrate from its Nachu mine in Tanzania. The company has ordered equipment and hired staff.

Next, it has to choose a location in the United States for the AAM commercial facility.

Meanwhile, the company needs to get its lithium materials certified by the United Nations for transport.

Last Friday, Magnis told investors there would be a delay in the certification due to a bad cell result.

Magnis has a 61% interest in the plant, which commenced commercial lithium cell production in August 2022. It began the process of securing independent certification from the UN late last year.

The independent certification process ensures that the batteries are safe to transport in large quantities by air, sea, rail, or road. The certification is based on international safety standards, including Standard UN38.3.

Certification will allow Magnis to ramp up the size of its sales.

In its statement, Magnis said all 10 cells submitted for UN certification had to pass and one cell failed.

The company said:

In one of the last tests performed, a cell reported an irregular result which has resulted in the process starting again with a new batch of cells.

In order to compress the timeline to achieve certification, additional accredited independent certifiers have been appointed. 

The Magnis share price tumbled by 8% to 40 cents on the news.

The post Magnis share price rockets 23% on Tesla deal appeared first on The Motley Fool Australia.

Stock in electric vehicle (EV) icon Tesla Inc (NASDAQ: TSLA) has had an astonishing start to 2023, recovering much of its 2022 losses within six weeks.

It tumbled 65% last year as soaring inflation drove interest rates higher and celebrity CEO (read: Technoking) Elon Musk staged a dramatic US$44 billion takeover of Twitter.

Tesla stock last traded at US$207.32.

That's a far cry from its final close of 2021 – US$352.26 – but a whopping 68% higher than it ended 2022 – US$123.81.

So, what's been bolstering the tech giant's share price so far this year? Let's take a look.

Why has Tesla stock soared into the new year?

The first six weeks of 2023 haven't been entirely easy for those invested in Tesla stock. Though, it's ultimately been a fruitful year so far.

The company started the year out on arguably the wrong foot, announcing it had delivered a potentially eye-popping 1.3 million EVs in 2022. But, despite marking a new record, that figure fell short of Musk's previous pledge to increase deliveries by 50% annually.

Musk also faced a legal challenge in recent weeks, with a group of Tesla shareholders taking the billionaire to court on allegations he misled investors by tweeting that he was taking the company private in 2018. A jury cleared Musk of any wrongdoing, the Guardian reports.

But it wasn't the win that's seemingly sent Tesla stock rocketing in 2023. It's leapt nearly 44% since the company dropped its quarterly results on 25 January.

Tesla posted US$1.19 of adjusted earnings per share (EPS) for the three months ended December, beating average analyst expectations of US$1.13, The Motley Fool reports. Meanwhile, its revenue for the quarter leapt 37% year-on-year to US$24.3 billion.

That saw its full-year unaudited adjusted EPS come in at US$4.07 while its revenue soared 51% to around US$81.5 billion. Its profits also nearly doubled to reach US$12.6 billion.

Not to mention, investors are likely looking forward to Tesla's next earnings release after it announced it's cutting 20% from the cost of its Model 3 and Model Y in the United States and Europe last month, my Fool colleague Mitch reports.

The post Boom! Why has Tesla stock rocketed 68% so far in 2023? appeared first on The Motley Fool Australia.

After an unambiguously terrible 12 months, one expert has declared now the time to buy up growth stock at rock bottom.

Frazis Capital specialises in "explosive" growth shares, predominantly on the US markets. While it almost doubled clients' money in 2020, the 12 months to October 2022 saw it lose more than 61%.

But in a memo to clients this week, founder and portfolio manager Michael Frazis was upbeat.

"Our strategy from here is to make sure this fund is the single best way to play a recovery in technology and growth," he said.

"Key companies are down 85% to 90%, are trading at 25% free cash flow yields, and are still posting solid revenue growth."

Still many growth stocks at all-time lows

The Nasdaq Composite (NASDAQ: .IXIC) has jumped almost 10% so far this year.

But Frazis believes many stocks are still going for an absolute bargain.

"Many companies are still at lifetime valuation lows," he said.

"At current trend lines, US CPI [inflation] will be sub 2% by May/June this year. This was a Fed-induced slowdown more than anything else. At some point, this headwind will become a tailwind."

Technology and life sciences, which were hammered over the past 12 to 14 months, make up much of Frazis' portfolio.

But recent headlines about ChatGPT demonstrate just how critical these industries are for the future.

"Professional and retail investors are significantly underweight on the sector that historically generates the most wealth, with recent advances in artificial intelligence a powerful reminder of why this is the case."

Cheap shares but the businesses are still growing

Frazis demonstrated how a couple of his holdings that performed poorly in 2022 are now looking healthy for those willing to buy in right now.

"Shopify Inc (NYSE: SHOP) continued to stack revenues throughout 2022 but this was overpowered by a >90% multiple contraction," he said.

"In January, Shopify broke above key moving averages for the first time in over a year. Since it has continued growing throughout this period, the stock can move to significant new highs without valuations ever approaching 2021 levels."

Electric car maker Tesla Inc (NASDAQ: TSLA) saw its shares halve over the past year on the back of worries about production, sales, and chief Elon Musk's distraction with Twitter.

So the stock can be bought on the cheap for a business that's still growing strongly.

"Company reports are still solid. Tesla, which lost ~75% of its value, reported EPS growth of 78% year-on-year, on a forward PE that got as low as 20," said Frazis.

"Tesla just reported Q4 37% revenue growth and 57% GAAP EPS growth."

There are a whole bunch of software companies in the US that are in the same boat.

"On a growth-adjusted basis, software is cheaper than at any point in the last decade," said Frazis.

"We've said this before, but that doesn't make it any less true today: US growth software is a screaming long-term buy."

Frazis reminded his clients that after the bear markets of 1973-74 and 1980-82, stocks posted their strongest-ever returns.

"There will be a point where fast growing tech companies transition from the very worst place to be invested to where they usually are: the very best. We will be there for it."

The post 'Lifetime lows': Expert reckons these shares are 'screaming buys' right now appeared first on The Motley Fool Australia.

Tesla Inc (NASDAQ: TSLA) is one of the most famous share investments in the world. This fame has almost certainly been fueled by the legendary run Tesla stock went on between 2019 and 2022. The rather prominent public profile of its CEO Elon Musk would also be a factor.

But Tesla has many other tailwinds behind it too. It is an undisputed leader in the electric vehicle and battery space, with its popular cars now topping electric vehicle sales around the world. Its innovative approach to vehicle design and technology has won the company legions of global fans.

And Tesla continues to expand into previously unexplored territory. It has begun rolling out its Tesla Semi freight truck and plans to launch its highly-anticipated 'cybertruck' later this year.

Tesla is also a leading provider of household and commercial-scale storage batteries and solar technology.

There's little doubt that government policies encouraging emissions-free travel and power generation are also powerful driving forces behind this company's success. Policies such as electric vehicle subsidies will probably remain in place for decades, which will undoubtedly help the company's growth.

But let's talk about Tesla stock. How lucrative have the company's shares been over the past few years? And has the horror 2022 Tesla suffered dented investors' longer-term returns?

How much has Tesla stock made investors over the past three years?

Let's assume an investor bought US$5,000 worth of Tesla shares three years ago. That would have been in January of 2020. So back on Monday, 21 January 2020, Tesla stock closed at a split-adjusted US$36.48 per share.

If an investor dropped US$5,000 on Tesla shares back then at this price, they would have received 137 shares of the company, with a couple of dollars left over.

As of last night's (our time) market close over in the United States, Tesla stock was fetching US$127.17 each. Thus, our 137 shares would, right now, have a value of US$17,422.30. That represents a return of close to 250% over just three years.

So Tesla has still been a real winner for longer-term investors, despite the woes of 2022. Saying that, the company has had its fair share of both ups and downs recently.

Back in late 2021, Tesla stock reached a high of US$414.50. At that point, our 137 shares would have been worth a whopping US$56,786.50.

Who knows, maybe Tesla will get back there one day. But we shall have to see what happens in 2023 first.

The post If I'd bought $5,000 of Tesla stock 3 years ago, what would my investment be worth now? appeared first on The Motley Fool Australia.

The past year has been a gutwrenching experience for anyone holding Tesla Inc (NASDAQ: TSLA) shares.

A debilitating blow was dealt to the electric vehicle (EV) makers' valuation in 2022. Unfortunately, a mix of demand concerns and Elon Musk's Twitter-buying escapades contributed to a crushing 65% fall in the company's share price.

Despite the numerous reported fiascos, buying activity of Tesla shares among Aussies was as feverish as ever during the final quarter of 2022, according to data from investment company eToro. As fate would have, shares in the EV company are up 21.6% this year already.

So, is there a case for investing in Tesla right now?

Oh no, not the price cuts…

You might have heard the news… Tesla has cut the prices of its Model 3 and Model Y by as much as 20% in the United States and Europe. This has prompted a cacophony from commentators on how this is a bleak indicator of weakening demand as competition ramps up.

While I believe that is partly true, I personally don't believe the cuts are the apocalyptic signal that some claim it to be. Instead, the move appears more of a reaction to both government incentives and economic conditions — allow me to explain…

Prior to the price cuts, Tesla's entry-level Model Y (long range) did not qualify for the US government's US$7,500 clean vehicle tax credit. The new price tag of US$52,990 — a 20% reduction — makes the car eligible.

Furthermore, the reduced prices might mean that Tesla wins more sales that would have otherwise gone to cheaper alternatives such as Chinese EV maker BYD. According to Reuters, Tesla sales in China surged following the cuts.

On the economic front, there's a good chance that inflation and jumbo interest rate hikes have suppressed demand. At the end of last year, the Federal Reserve Bank of St. Louis said it had "reasonable confidence" that the US will fall into a recession in 2023.

As a Tesla shareholder, I think the tradeoff of a reduced margin in the short term to prop up sales is a worthwhile one. A sale made at a lesser margin is better for cash flow than no sale at all.

Thankfully, Tesla has that flexibility. For the 12 months ending September 2022, the company reported a net income margin of 14.9%. For comparison, BYD operated at a margin of 2.9%.

Are Tesla shares a buy?

Never ask a barber if you need a haircut. I'm a Tesla shareholder and I'll clearly have my biases on whether it's time to buy shares in the EV maker. But, for what is worth, Tesla looks well positioned compared to the competition at the moment.

As far as I know, there isn't another car manufacturer out there with the same pricing power that Tesla holds. Likewise, no other automaker has a balance sheet as healthy as the Elon-led business. Most other car companies are juiced up on debt like no tomorrow.

For those reasons — accompanied by the belief that EV adoption is a long tailwind — I personally believe Tesla shares look attractive right now.

The post Aussie investors are buying Tesla shares in droves. Should you? appeared first on The Motley Fool Australia.

The US-listed electric battery and vehicle manufacturer Tesla Inc (NASDAQ: TSLA) remains one of the most controversial stocks on the US markets.

After a blistering run up over 2020 and 2021, Tesla shares had a shocker last year. The company started 2022 at US$352.26 a share, but ended the year down a nasty 65% at US$123.18:

So investors have taken one mightily cold bath on this one.

But for fans of Tesla, perhaps these lower prices are drawing some eyes. So could this be the moment to jump into this future-facing company?

Elon Musk…

Well, the first thing to note is that it's very possible that Tesla's woeful performance last year wasn't entirely the fault of the company's performance itself. Tesla CEO Elon Musk is a highly controversial character. Musk has been an eyebrow-raiser for years. But his antics in 2022 were certainly divisive.

Most pressingly, many investors began to worry that Musk's quest to purchase the social media giant Twitter compromised Tesla.

Not only is Musk now running Twitter in addition to Tesla and his other companies like SpaceX, but he has sold down significant chunks of his Tesla holdings to fund the US$44 billion purchase.

If you don't like Musk, his antics or his… unique way of running his companies, then perhaps Tesla is not an investment for you. Musk remains Tesla's largest single shareholder, and it's likely that he will remain at the helm of the company for as long as he wants to.

So everyone knows that Tesla is a leading provider of fully electric vehicles. Many countries, such as the United Kingdom, have already passed laws that will outlaw the sale of internal combustion-powered vehicles over the next two decades.

And there is significant pressure around the world to move vehicle fleets to electric power in order to combat climate change. This is a powerful tailwind behind Tesla.

The company is also expanding its vehicle range to cater for more customers. Its most popular models are the mass-marketed Model 3 and Model Y. But the company is working on bringing out its 'cybertruck' ute. It has also recently begun rolling out the Tesla Semi.

So I think there is plenty of growth left in Tesla's future.

But let's get down to some numbers now.

Is Tesla stock a buy or a sell today?

Elon Musk stated that he has set a goal for Tesla increasing its vehicle deliveries by 50% in 2022. The company did not quite achieve that, announcing recently that total deliveries grew by 40% in 2022 to 1.31 million.

Still, I consider that to be a very impressive figure, especially for such a capital-intensive business.

At the current Tesla stock price, the company has a price-to-earnings (P/E) ratio of 37.71. For a company that just grew its sales by 40%, I personally think that P/E ratio is quite reasonable.

If I was thinking about buying Tesla stock today, considering these metrics, the final question I would ask myself is this: 'Is this company going to be larger and more profitable in 10 years' time than it is today?'. If the answer to that question is yes, then the current pricing might be your best chance to buy Tesla shares.

The post Should I buy Tesla stock for 2023 or not? appeared first on The Motley Fool Australia.

Tesla shares started the year at US$352.26 each. But by the end of last month, the electric vehicle and battery manufacturer was down to just US$123.18 a share. That's a loss for Tesla stock of just over 65% for the year.

Ouch.

Tesla's 2022 performance was quite a change of pace for a company that has previously given investors mindblowing gains. Tesla was up more than 500% in 2020 and up another 50% or so in 2021. 

So with a selldown of this magnitude, are we looking at the mother of all buy-the-dip opportunities? Or is Tesla just another falling knife right now?

Well, let's get into why the Tesla share price had such a rough year. It was undoubtedly partly due to rising interest rates in the US.

Just like Australia, the United States has seen a very sharp increase in interest rates over the past 12 months, as the US Federal Reserve moves to clamp down on inflation.

This has been especially painful for most growth companies, not just Tesla. Name any prominent tech stock listed in the US, and chances are it had a rough year in 2022.

Has Elon Musk's Twitter antics damaged the Tesla share price?

But not helping Tesla's cause was its CEO and flagbearer, Elon Musk. Musk has had, well, a very interesting 12 months, to put it lightly. Not only did he buy social media platform Twitter outright, but he has also raised many eyebrows with his new policies championing free speech at the company.

Many investors have worried that Musk's preoccupation with Twitter has seen him neglect Tesla, as well as potentially alienate its affluent customer base. This probably explains why the Tesla share price's most painful months were in the back half of 2022.

And yet I would argue that Tesla's brightest days are still in front of it. Despite the issues in its leadership team, the company still posted a 40% increase in vehicle deliveries in 2022 to 1.31 million, with production up 47% to 1.37 million.

That's breakneck growth for any company, but it is especially impressive for a capital-intensive vehicle manufacturer like Tesla. 

Tesla is also preparing to launch its much-anticipated 'cybertruck' in 2023, which could give its numbers an even bigger boost in years to come.

Trucks (or utes as we call them here) are a segment of the market that Tesla doesn't currently address, so this could see its market share expand even further. Ditto with its rollout of the Tesla Semi which is currently underway.

So all in all, I think that the current Tesla stock price, now trading at its lowest level in almost three years (with a current price-to-earnings (P/E) ratio of 36.9), is a compelling buying opportunity considering the growth runway that remains in front of this company.

The post Tesla share price correction: A chance to get rich? appeared first on The Motley Fool Australia.

Does that mean it's bad news for the lithium price and the lithium players? Let's have a look at what's going on.

Tesla discounts cars

The Tesla share price has had a terrible time this year. The electric carmaker has dropped 37% in December 2022 alone. It's down 50% over the past six months and it has fallen 69% since the start of the year.

As reported by CNBC, Tesla has started offering discounts of US$7,500 on some of its "high-priced" electric vehicles in the US last week. This was reportedly double what the previous incentives were. The idea was that it would encourage customers to take deliveries.

Tesla is also reportedly offering credits in both Canada and Mexico, and it has also cut the price of cars in China.

CNBC reported that the "price cuts on Tesla's Model 3 sedan and Model Y crossover are seen as a sign of weakening demand."

Plus, it is offering 10,000 miles of free charging at Tesla's supercharger for customers that take delivery of a new Tesla in December.

What does this mean for ASX lithium shares?

Names like Pilbara Minerals Ltd (ASX: PLS), Allkem Ltd (ASX: AKE), Liontown Resources Limited (ASX: LTR) and Mineral Resources Limited (ASX: MIN) aren't the ones selling the cars. But, the price of lithium is extremely important for how much profit they make.

If mining costs don't really change in the short term, but the resource price is jumping higher, then most of the new revenue can go straight to net profit (aside from paying more to the government). But, it can work the same on the way down – lower revenue largely wipes off net profit.

How much demand there is for lithium by the electric vehicle makers can then influence how much demand there is for lithium.

Since 9 November 2022, the Pilbara Minerals share price has dropped 30%.

In mid-December, Pilbara Minerals reported that it sold two cargoes for a combined total of 10,000 dry metric tonnes (dmt) at an average price of US$7,552 per dmt. The equivalent SC6.0 price negotiated equates to a price (inclusive of freight), CIF to China of US$8,299 per dmt. This represented a low-digit decrease of the price compared to the mid-November auction.

Does this represent a peak? Is the price about to start sliding back?

Maybe not yet. On 21 December 2022, Pilbara Minerals reported that it had "achieved a significant improvement in pricing outcomes with its major offtake customers" after completing price reviews. The revised offtake pricing applies "for all shipments to the company's major offtake customers falling within December 2022 and onwards."

Based on the market's pricing reference data, average pricing across major offtake customers would equate to approximately US6,300 per dmt.

Foolish takeaway

While it's hard to say what's going to happen next, it's probably not a good sign for the lithium price or the ASX lithium share sector that Tesla is lowering its car prices, although Tesla doesn't represent the whole industry. However, with how far the Pilbara Minerals share price has dropped, it could represent long-term value at this level.

The post What can ASX lithium share investors learn from Tesla discounting its cars? appeared first on The Motley Fool Australia.

1) The S&P/ASX 200 Index (ASX: XJO) is trading higher on Tuesday following the positive lead on Wall Street, where the S&P 500 rose 1.4%, with the tech-heavy Nasdaq also up a healthy 1.3%.

Tomorrow sees the US consumer price index reading which is expected to show inflation continues to fall, something that would see the Federal Reserve 'only' hike the interest rate 50 basis points higher on Wednesday.

A soft inflation print has equity watchers on high alert, given the S&P 500 roared 5.5% after November's headline inflation figure came in lower than expected.

In a rather heroic extrapolation, analysis from market maker Optiver suggested the US equity benchmark could again rise as much as 5.5% on Tuesday (US time) should headline inflation come in 0.2 percentage points below estimates on a year-over-year basis, according to Bloomberg. 

The stock market is on high alert for a strong move either way, as evidenced by the VIX – a measure of volatility – jumping 9.5% higher in US trading on Monday despite equity markets also rising. The two gauges usually move in opposite directions.

2) The Tesla (NASDAQ: TSLA) share price bucked the trend in US trading on Monday, slumping another 6.3% to $167.82, its lowest close since August 2020. 

A favourite amongst retail investors, Tesla shares are now down 58% so far in 2022, contributing towards what JP Morgan estimates is a 38% loss for US retail traders this year. 

Gone is the "buy the dip" mantra, replaced by "sell before it's too late." Those that rode Tesla shares from around $35 to over $400 might be locking in profits, while those that jumped on late in the game might be booking tax losses, or even bailing out of the stock market altogether.

"The losses this year were unprecedented, especially for the younger generation of investors," said Giacomo Pierantoni, the head of data at Vanda in Singapore on Bloomberg. Whether they keep ploughing money into the market — buying the dip, as they say — or lose faith in investing and give up altogether could help determine their ability to retire in the coming decades.

3) Regardless of the fate of Tesla stock – I have no position – I do hope the many retail investors who have been dealt a tough investing lesson these past 18 months don't give up on the stock market, especially now that many popular COVID stocks have seen their share price cut in half, or more.

The stock market offers ordinary folk like you and me the opportunity to earn outsize returns, for very little effort. Invest regularly, ideally every month, into a low-cost index-tracking ETF like the Vanguard MSCI Index International Shares ETF (ASX: VGS) and, over time, you could return around 8% per annum, something that would roughly double your money every nine years.

All you need to do is resist any temptation to sell out during the inevitable periods of volatility, like we've been experiencing these past 18-odd months.

The above-mentioned data compiled by Vanda suggests US retail investors have collectively lost $US350 billion this year "as big bets on risky stocks and former high-fliers like Tesla Inc. backfired for the mom-and-pop set".

If that's you – and my growth-heavy portfolio has shed some serious blood this year – I urge you to stay the distance and make a lifelong commitment to investing in the stock market.

You may need to give up individual stock picking – you'll get some winners but you'll also need to handle the losses and your emotions when you are inevitably wrong – but you should be able to enjoy outsized returns by investing in one or more low-cost ETFs, like the one mentioned above.

4) As if to emphasise how difficult stock picking can be, especially in this current economic environment, take these two conflicting reports in the AFR today…

1. Tech stocks set for rebound after a 'nightmare' year, according to Wedbush Securities.

"We believe overall the tech sector will be up roughly 20 per cent in 2023 from current levels with big tech, software, and semis leading the charge despite the macro and Fed wild cards abound."

2. Goldman warns of 'a clear capitulation' in equities.

"A shift from inflation to growth concerns (i.e. a transition from rates to growth volatility) may trigger a clear capitulation from investors into next year."

So which is it to be?

I have no idea. As ever, as an optimist, and a lifelong stock market investor (albeit I started quite late, at the age of 24), I'm hoping 2023 will deliver a positive overall return, notwithstanding continued heightened volatility. 

My simple plan, one that should see me into retirement and well beyond…

Stay invested. Keep investing. Add regularly. Ignore near-term volatility. Live happily ever after. 

The post This simple investing plan could save the retirement plans of millions of retail investors appeared first on The Motley Fool Australia.

ASX shares are having a top day of gains so far this Thursday. At present, the S&P/ASX 200 Index (ASX: XJO) has risen by a healthy 0.85% all the way up to just under 7,350 points. But those gains look rather small in comparison to what's happening with the BetaShares NASDAQ 100 ETF (ASX: NDQ).

This index-tracking exchange-traded fund (ETF) is rocketing in value today. BetaShares NASDAQ 100 ETF units are currently enjoying a 2.78% surge in value, lifting the fund up to $27.38 per unit.

So what's behind these pleasing rises this Thursday?

Why is the BetaShares NASDAQ 100 ETF surging in value?

Well, the BetaShares NASDAQ ETF is an index fund that tracks the NASDAQ-100 (NASDAQ: NDX) over in the United States. The NASDAQ 100 is an index that tracks the 100 largest shares on the NASDAQ stock exchange, excluding certain financial companies.

The NASDAQ is well known for being the home of most of the top tech shares on the US markets. Apple Inc (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Amazon.com Inc (NASDAQ: AMZN), Netflix Inc (NASDAQ: NFLX), Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) and Tesla Inc (NASDAQ: TSLA) all call the NASDAQ home. As you can tell by their ticker codes.

So as goes the performance of the NASDAQ 100 Index, so goes the BetaShares NASDAQ 100 ETF.

And lo and behold, the NASDAQ 100 had a stellar night last night in US trading. The iIndex finished the session up a rather extraordinary 4.58% to back over 12,000 points.

That's a two-and-a-half-month high. These gains were spurred by the likes of Apple rising close to 5%, Alphabet soaring more than 6%, and Tesla rocketing an incredible 7.67%.

So the BetaShares NASDAQ ETF was always going to have a cracking day. Why isn't it rising by 4.58% like its index, though?

Well, the BetaShares NASDAQ ETF houses assets priced in US dollars. But it is quoted in Australian dollars. Thus, currency movements affect its value, alongside the value of its underlying shares.

And while the US markets rocketed overnight, so too did the Australian dollar. A higher Aussie dollar means that US shares become less valuable in Australian dollar terms. So hence the more muted gains we have seen with the ETF.

Nevertheless, there's no doubt investors are very happy with this ETF today.

The post Why is the BetaShares NASDAQ 100 ETF (NDQ) having such a stellar run today? appeared first on The Motley Fool Australia.

What happened 

Tesla's (NASDAQ: TSLA) stock was rising this afternoon after Federal Reserve Chairman Jerome Powell said that smaller interest rate hikes will begin in December. 

That news caused market indices to jump -- with the S&P 500 gaining 2.3% and the Nasdaq Composite rising 3.4% -- and they took Tesla's share's along with them. 

The electric vehicle stock was up by 5.3% as of 3:34 p.m. EST. 

So what 

Speaking at the Brookings Institution today, Powell said that the Federal Reserve will likely begin smaller increases to the federal funds rate at its December meeting. 

Powell also said that the Fed's moves, including past interest rate hikes, will take time to slow inflation and that "it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down." 

Investors were very happy to hear that today, and they specifically latched onto Powell's comments when he said that "The time for moderating the pace of rate increases may come as soon as the December meeting." 

Growth stocks like Tesla have been especially vulnerable to the Fed's aggressive interest rate hikes as investors have worried that the Fed will end up pushing the U.S. economy into a recession. 

Tesla CEO Elon Musk has been concerned about exactly that and tweeted earlier today, before Powell's comments were published, about the potential for a recession: 

Trend is concerning. Fed needs to cut interest rates immediately. They are massively amplifying the probability of a severe recession.

-- Elon Musk (@elonmusk) November 30, 2022

Now what

While the Fed isn't cutting rates like Musk hoped, investors are happy to see that the severity of the increases will at least decrease.

But Powell also warned that the Fed has more work to do. "Despite some promising developments, we have a long way to go in restoring price stability," he said today. 

But with central bank officials now indicating that less aggressive interest rate increases could be on the horizon, many growth stock investors are celebrating the news today. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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You might not realize it, but two weeks ago marked one of the most important data releases of the quarter. November 14 was the last day for money managers and wealthy individuals with at least $100 million in assets under management to file Form 13F with the US Securities and Exchange Commission.

A 13F lets Wall Street professionals and everyday investors have a look under the hood to see what the brightest minds on Wall Street bought, sold, and held in the most recent quarter. Even though 13Fs have their flaws -- they're at least six weeks old by the time they're filed, meaning additional trades may have been made -- they can help investors identify the companies and trends garnering the attention of top money managers.

Although most billionaire money managers have used the 2022 bear market as an opportunity to buy high-quality companies at a discount, others haven't been able to run to the exit quickly enough. What follows are three ultra-popular stocks billionaires have been busy selling.

Tesla

There's arguably no stock billionaires sold more aggressively during the third quarter than electric-vehicle (EV) manufacturer Tesla (NASDAQ: TSLA). All told, five billionaire money managers pressed the sell button, including Jim Simons of Renaissance Technologies, Jeff Yass of Susquehanna International, Philippe Laffont of Coatue Management, Ken Griffin of Citadel Advisors, and Israel Englander of Millennium Management. Simons reduced his fund's stake by 99.9%, while the four other billionaire fund managers reduced their stakes by 16% to 55%.

Why run for the exit? One reason may be the realization that Tesla isn't immune to the cyclical challenges facing the auto industry. Tesla has historically been valued at a nosebleed premium to legacy automakers on the notion that it'll outpace these stalwarts in the sales and profit-growth department. However, COVID-related supply chain disruptions, especially in China, coupled with historically high inflation and a weaker US and global economic outlook, bode poorly for near-term EV sales.

Perhaps an even bigger downside catalyst is Tesla's own CEO Elon Musk. Although Musk is a visionary who's been largely credited with helping Tesla become one of the world's largest publicly traded companies, he's also become a significant liability for the company. Aside from the significant distraction of operating social media site Twitter, a large number of promises regarding the debut of new vehicles or innovations have failed to come to fruition. Tesla's valuation is very much dependent on Musk's visions becoming reality.

On the bright side, Tesla is profitable on a recurring basis, and the ramp-up at its two new gigafactories (Berlin, Germany, and Austin, Texas) should allow production and sales to quickly scale. But maintaining its North American market share will undoubtedly prove difficult as legacy automakers and newer players scale their own EV operations.

Walt Disney

Disneyland may be the "Happiest Place on Earth," but Walt Disney (NYSE: DIS) has been nothing short of a frowny face for billionaire investors. During the third quarter, billionaires Ole Andreas Halvorsen of Viking Global Investors, Simons of Renaissance Technologies, and Ray Dalio of Bridgewater Associates, all sold shares. In particular, Halvorsen and Dalio completely exited their respective fund's positions in Disney.

The about-face we've witnessed in Disney stock can likely be explained by two factors. First, the company still hasn't put its operating issues tied to the COVID-19 pandemic into the rearview mirror. China's zero-COVID strategy continues to hamper Disney's theme-park operations. Additionally, traditional moviegoing hasn't come close to achieving its pre-pandemic level.

The other issue is that Walt Disney's streaming services are racking up some jaw-dropping losses as they scale. While direct-to-consumer revenue rose 8% in the company's fiscal fourth quarter (ended Oct. 1, 2022), the segment's operating loss nearly doubled to $1.5 billion.  Poor operating performance is not something Disney shareholders are used to.

However, the subscriber figures at Disney+ (164.2 million) have ramped up incredibly fast, and the company appears confident the segment will turn the corner to profitability by the end of fiscal 2024.

What's more, Walt Disney has exceptional pricing power and the ability to engage consumers like no other media company. In short, these billionaire sellers may ultimately regret their decision.

Meta Platforms

The third ultra-popular stock billionaires were busy selling in the third quarter is social media behemoth Meta Platforms (NASDAQ: META). Billionaires Stephen Mandel of Lone Pine Capital, Griffin of Citadel Advisors, and Simons of Renaissance Technologies, all slashed their stakes in Meta by multiple millions of shares from the sequential second quarter.

Perhaps the biggest knock against Meta is a weakening macroeconomic outlook for the US and global economy. Advertising is one of the first spending categories to be hit when the winds of recession begin blowing. Given that Meta generates 98% of its revenue from advertising, its top and bottom line are directly impacted by economic weakness.

Another plain-as-day concern billionaires have about Meta is CEO Mark Zuckerberg's exorbitant spending on the metaverse -- the 3D virtual world that allows users to interact with each other and their environment. Reality Labs, the company's metaverse operations, recorded $1.4 billion in sales through the first nine months of 2022, but racked up a jaw-dropping $9.4 billion in losses.  Worse yet, spending is expected to increase in 2023. The end result has been reduced free cash flow and lower quarterly profits.

But as with Walt Disney, I'm skeptical of the skeptics. Meta owns four of the most popular social media assets on the planet (Facebook, Facebook Messenger, WhatsApp, and Instagram) and should benefit from strong pricing power during extended periods of economic expansion.

Furthermore, Meta is sitting on a healthy net cash pile totalling nearly $32 billion. The company has levers it can pull if it wants to boost its free cash flow. The point being that Meta Platforms' operating model is so dominant, and its balance sheet so flush with cash, it has the financial flexibility to make aggressive investments in the metaverse. After all, the metaverse could be the next multitrillion-dollar opportunity.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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As 2022 starts to close, it's only natural for investors to start peeking toward 2023. So far in 2022, the indexes have fared pretty miserably, with the Nasdaq-100 down 29% and the S&P 500 down 17%. Which one will have a better 2023?

Let's look at these indexes and their makeups and find out which is more likely to have a better 2023 ahead.

The indexes are highly concentrated on the top

At the top, the indexes have a lot of overlap.

Data source: Slickcharts. Data as of Nov. 19. *Note: Both Alphabet class shares combined.

Data source: Slickcharts. Data as of Nov. 19. *Note: Both Alphabet class shares combined.

As you can see, Apple, Microsoft, Amazon, and Alphabet make up a considerable chunk of these indexes. In the S&P 500, they account for 19.83%. It's basically double for the Nasdaq-100, with that group making up 39.16% of the index. It's pretty straightforward: How these companies do will significantly steer how the overall index does.

While these three are tech-focused, they compete in different markets. Both Apple and Amazon are a good measure of the pulse of the consumer, as their sales are highly affected by consumer sentiment. If inflation cools, and consumers don't need to worry about rising grocery prices or housing costs, they may treat themselves to the latest device.

Alphabet and Microsoft are business-focused, but for different reasons. Alphabet's primary revenue stream is advertising, and many clients have pulled back their spending levels in 2022 due to the uncertain business environment. If the outlook improves, expect this revenue to return. Microsoft's cloud business and Office product suite indicate how willing businesses are to spend on their infrastructure, but Microsoft's consumer product division also indicates how individuals are doing. 

If the consumer gets stronger and business outlook improves, these four will boom. If that's the case, then the Nasdaq-100 will likely have a better year because it is concentrated in companies that will benefit the most. But if 2023 brings an economic recession, the S&P 500's diversity will help it to outperform the Nasdaq-100.

The companies outside the top five are very different

For the S&P 500, when you move out of the top five, the companies become much more diverse.

Data source: Slickcharts. Data as of Nov. 19.

Now, there are industrials, healthcare, and energy sectors represented, giving the index some much-needed balance. Looking at the top 20 reveals even more diversity, with financials, energy, and healthcare rounding the index out.

This is far from the case for the Nasdaq-100.

Data source: Slickcharts. Data as of November 19. Note: Both Alphabet class shares combined.

Besides Pepsi and Costco, these companies are more in the tech sector. But, unlike the S&P 500, it doesn't get much better outside the top 10, with most of the top 20 consisting of chipmakers, communication companies, and software businesses. Now, this probably isn't a surprise because the media often refers to this index as the "tech-heavy Nasdaq."

Still, tech businesses don't do well if the economy is struggling.

Does that mean you should write the Nasdaq-100 off? Absolutely not. Tech stocks tend to do very well in the recovery phases of a recession. Plus, the stock market is forward-looking, and stocks usually tend to do better during a recession than leading up to one.

That last tidbit of information should keep investors in the market, especially now with a recession, or at least an economic slowdown, imminent. However, if you're trying to decide which index to buy, you need to utilize the 2023 outlook. If you think 2023 will be a repeat of 2022, then the S&P 500 is the better choice. On the other hand, if you believe the economy will begin to recover and the Federal Reserve eases its interest rate hikes, then the Nasdaq-100 is the place to be.

One last point: There's nothing wrong with owning both indexes if you don't know what 2023 will bring. Personally, I think this is an intelligent strategy, as it gives investors the upside of recovery and the safety of a balanced investment.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Will the Nasdaq or S&P 500 have a better 2023? appeared first on The Motley Fool Australia.

What happened

The Tesla (NASDAQ: TSLA) share price jumped 7.8% on US markets on Wednesday amid analyst upgrades. 

So what

After shedding hundreds of millions of dollars in market value this year, Tesla's stock is now presenting investors with a more favorable risk-to-reward opportunity. So says Citigroup analyst Itay Michaeli, who upgraded his rating on the electric vehicle (EV) maker's shares from sell to neutral on Wednesday.

Michaeli noted that following the steep decline in its share price, Tesla's stock is now trading for about 30 times his earnings projections for this year -- a far more reasonable level, in his opinion.

Still, Michaeli warns that competition is intensifying in the EV arena. But he postulates that Tesla's competitive position could strengthen if the economy falls into a prolonged recession since a difficult economy would likely take a bigger toll on its smaller and less financially sound rivals.

All told, Michaeli boosted his share price forecast from $141.33 to $176, or roughly 4% lower than the stock's closing price on Wednesday. He did, however, say that improvements in Tesla's average vehicle selling price and gross margins would drive him to increase his valuation.

Now what

Morgan Stanley analyst Adam Jonas also thinks the sell-off in Tesla's shares is overdone. Jonas expects Tesla to be a prime beneficiary of the EV-focused incentives in the Inflation Reduction Act. He also noted that it is the only automaker that his firm covers that already earns a profit from its EV sales.

For these reasons, Jonas is far more bullish than Michaeli on Tesla's prospects. He has an overweight rating and a $330 price target on the stock. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla stock popped today appeared first on The Motley Fool Australia.

Electric vehicle (EV) sales are rising. In 2021, 6.6 million EVs were sold worldwide, nearly double the sales in 2020. EV Volumes, a data base, estimates 2022 global EV sales at 10.6 million, up nearly 60% from 2021. More than 16.5 million electric cars and trucks were on the road in 2021.

Despite such encouraging growth in sales, EV makers' stocks have continued to falter in 2022. Let's see why that was so, and if the stocks look attractive for 2023 after the steep declines.

Top EV stocks fell steeply in 2022

U.S. stock markets have corrected significantly so far this year. The S&P 500 is down 17%, while the Nasdaq Composite has fallen more than 28% as of this writing. Since growth stocks typically trade at high multiples, they tend to fall harder during market corrections. This has certainly been true in 2022.   

TSLA data by YCharts..

While Tesla (NASDAQ: TSLA) stock has fallen 49%, Lucid (NASDAQ: LCID), Rivian (NASDAQ: RIVN), and Nio (NYSE: NIO) have fallen more than 60% year to date. And all four stocks have fallen far more from their all-time high prices; while Tesla stock has dropped more than 55% from its peak, the others are down more than 80% from theirs.

Is the correction justified, or is there a buying opportunity?

In early 2021, the valuations of EV stocks went through the roof thanks to the hype surrounding electric vehicles. As the broader markets corrected, EV stocks fell, too. And supply chain challenges have hurt the production of EV companies while raising their costs. But has the recent decline finally made these stocks attractive?

For sure, the EV story is just getting started. All these companies have a long growth runway as the transition from internal-combustion vehicles to EVs unfolds. While it is broadly accepted that this transition is inevitable, what isn't as clear is which players will thrive in the long run.

Tesla continues to post solid performance

Tesla's stock seems to have fallen to an attractive level. While it is difficult to determine whether it'll fall further in the short term, the stock is intriguing for several reasons. To begin with, its valuation is far more sensible than it has been in the past.

TSLA PS Ratio data by YCharts.

Tesla's price-to-sales ratio has fallen to 8.3 from around 30 in January 2021. Although it still looks high compared to traditional automakers, that's because Tesla is still growing fast. The company's revenue increased 56% year over year in the third quarter. And that isn't a one-off quarter; its growth over the years is impressive.

TSLA Revenue (TTM) data by YCharts. TTM = traling 12 months..

The above chart compares Tesla's revenue growth over the last three years with that of traditional automakers.

At the same time, its margins remain impressive.

TSLA profit margin (quarterly); data by YCharts.

Overall, Tesla appears to be on a solid footing to keep posting sustained growth in the coming years.

Nio's growth looks impressive

Chinese EV maker Nio expects substantial growth in vehicle deliveries in the fourth quarter and in 2023. Although the company is still incurring losses, it is increasing revenue rapidly, as the chart above shows. Its upcoming models and expansion plans in Europe can be key drivers in the coming years.

Lucid and Rivian look promising

Lucid and Rivian are still at very early stages of their growth compared to Tesla, but both look promising. Lucid managed to establish itself as a serious player by delivering the longest range for its first model, the Lucid Air. The company, which started deliveries at the end of October 2021, has delivered roughly 2,500 cars in a year. It targets producing 6,000 to 7,000 cars in 2022.

After launching the Sapphire, Pure, and Grand Touring variations of the Lucid Air, the company now plans to open registrations for its first SUV, the Gravity, in early 2023. Its focus on the less-tapped Saudi market could help it drive significant growth.

After starting deliveries in September 2021, Rivian has already produced more than 15,000 vehicles. And it has a backlog of more than 114,000 units of its R1, including both SUVs and pickup trucks. It has an attractive order backlog, too: 100,000 delivery vans from Amazon. What's more, it has enough cash to fund its operations through 2025.

Both Lucid and Rivian are at early stages of their growth and are incurring losses. As young EV makers, they are more affected by the supply chain issues that the industry is facing than are the established players. Both companies look promising, but investors should note that these stocks are riskier compared to those of legacy automakers or Tesla.

But they have corrected drastically and, if successful, could generate windfall returns for long-term investors. In short, all four stocks look like attractive buys for 2023.  

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Down more than 50% from their highs, are Tesla and these other EV stocks buys for 2023? appeared first on The Motley Fool Australia.