Is Tesla Stock a Buy, Hold, or Sell?

There have been a lot of headlines about Tesla (NASDAQ:TSLA) stock, not all of them good. Here is what to consider when watching the stock.

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There have been a lot of headlines coming out about Tesla (NASDAQ:TSLA) stock lately. Tesla stock has surged up and down like a yo-yo as some investors see the recent drop as a chance to get in, others the need to get out.

So, which is it? Let’s look at whether Tesla stock is a buy, hold, or sell on the market today.

Buy

There are definitely reasons to pick up Tesla stock these days, as popular investment guru Cathie Wood would be quick to tell you. The market expansion and global presence of Tesla have been quite strong. The company recently cut vehicle prices and offered incentives to demonstrate its commitment to expanding its market reach. Furthermore, to battle back competition from China.

It continues to be ahead of the pack in terms of product innovation and technological leadership, even with full self-driving capabilities improving. And, of course, there’s brand loyalty, and that’s something that really cannot be purchased. 

Even so, perhaps the best bet for buyers is that the company looks like it’s made a lot of strategic initiatives to improve its market position. This includes investing in charging infrastructure and creating local production to provide long-term growth. Analysts anticipate sales would increase in the second quarter as well, particularly from its Model 3 and Cybertruck sales.

Hold

But there are still many challenges for Tesla stock. The market itself remains a volatile place, so any bad news now and for the future have sent shares lower. Recent challenges came from lower-than-expected first-quarter deliveries, and this reduced earnings predictions for the stock, leading to a drop.

These uncertainties about the near term at least give investors a reason to hold while the market improves and Tesla stock sales as well. After all, as mentioned, the company does seem to have that long-term growth potential as electric vehicle (EV) use expands — especially with people like Cathie Wood on the company’s side.

Wood recently purchased Tesla stock even after the drop, with the belief the company could one day hit US$2,000 per share. That’s quite the increase from US$171.50 as of writing. And certainly a reason to keep holding the stock.

Sell

The thing is, the recent results were disappointing for investors. The company reported worse-than-expected deliveries, and this also led to a reduction in full-year earnings predictions. This could mean we’re going to see a tough year ahead, especially in the form of achieving profitability.

What’s more, Tesla stock is still under pricing pressure as it attempts to attract customers all around the world. And there have never been more competitors in this space, especially coming out of China where they are making these cars even cheaper.

Tesla’s aggressive pricing strategies and discounts have now led to a decline in auto gross margins after peaking in the fourth quarter of 2021. If this continues, it could be a signal that Tesla stock’s business model has underlying issues and could impact long-term growth. All of this has led to analysts downgrading the stock lower and lower.

Bottom line

Tesla stock in your portfolio may get worse before it gets better. And that’s why it might be a good idea to get out, and instead consider investing in companies that support the growth in the EV sector. In fact, one great way is to invest in Lundin Mining (TSX:LUN).

Lundin stock provides copper production to the world, with 63% of its production focused on the mineral. Copper is needed to provide power to electrical supply as well as EV support. From the battery to storage to the charging stations, Lundin stock will be needed to provide those improvements.

So, if you’re getting out of Tesla stock, put that cash to good use and instead consider Lundin stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Tesla. The Motley Fool has a disclosure policy.

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