It’s been a crazy ride for Tesla (NASDAQ:TSLA) shareholders in 2024. Tesla stock opened 2024 trading at $250.08. It fell 44% in less than four months to a low of $138.80. In the 74 days since, TSLA is up 78%, less than $60 from $300, a level the stock hasn’t seen since September 2022.
Looking at the options action — Tesla’s options volume on July 3 was 4.14 million, double the 30-day average of 2.09. The put/call volume ratio on the day was 0.60, which is a bullish sign from investors.
Meanwhile, thanks to several days of bullish options buying, Tesla’s put/call OI (open interest) ratio was 0.97, which suggests investors are mixed about its prospects in the future.
Given the analysts also are split — of the 54 covering its stock, 25 rate it a Buy — it’s really tough to know when, or if, TSLA stock will get to $300.
To get there, Tesla will have to do this.
The Lowest Common Denominator
I believe that when you want to introduce change into a situation, appealing to the lowest common denominator gives you your greatest chance of success. What I mean by this is that if the person or thing most resistant to the change can see the wisdom of the move, then the rest of the conversions will be so much easier, not to mention faster.
So, with EVs, the lowest common denominator is the 18- to 34-year-old car buyer demographic. According to S&P Global Mobility, the share of new vehicle sales for this age demographic has fallen to 9.2%, the lowest level ever recorded.
If Tesla can figure out how to get this group buying its EVs, Tesla stock getting to $300 will be a piece of cake, and sooner than you think.
The problem is the 18- to 34-year-old demographic can least afford to buy a car, let alone a Tesla EV.
“The cost of new vehicle ownership is up 30% since 2019. Only 14% of registered vehicles have an MSRP below $30,000 today. This was 50% seven years ago,” S&P Global Mobility stated.
Commit to a Low-Cost Option
As S&P Global Mobility points out, there are 450 brands of car or truck you can buy new right now. With electrification, that’s expected to rise to 650. That’s a lot of choices. It goes on to suggest there will be over 130 launches of new vehicles over the next two years with more than half EVs.
The problem with all these options?
Few are affordable, especially not for the younger crowd. The traditional solution would be to market to the 65+ crowd who buy 26% of all new vehicles.
However, counterintuitively, if Tesla builds a bargain-priced EV that everyone can afford, as these 18- to 34-year-olds get further into their working careers, the ability to step up to a more expensive EV becomes a lot more realistic.
Tesla CEO Elon Musk said earlier this year that cheaper EVs could be coming by the first half 2025. That had a lot to do with a higher share price over the past two months.
“We’ve updated our future vehicle lineup to accelerate the launch of new models, previously mentioned start of production in the second half 2025. So, we expect it to be more like the early 2025, if not late this year,” Musk said in the Q1 2024 conference call.
Now, as Musk said, it will produce the new models on its existing assembly line, which in theory means it could launch a cheaper model sooner than we think. Musk has a history of exaggeration, so I would be inclined to lean to the second half 2025, or even the first half 2026.
A specific, detailed plan, even if the EVs didn’t roll off the line until 2026, would easily add $30 to its share price in short order.
Until there is a solid commitment to have a cheaper model on U.S. roads in 2026, without any other substantial news or catalyst, it’s hard to see Tesla reaching $300 by the end of 2024.
If you own it, I wouldn’t sell it. If you don’t, I might wait to see if it falls back a touch over the summer before taking a position.
You could best summarize my opinion on Tesla stock as a Hold.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.