Should You Buy Tesla Stock Before Jan. 2?

Core Viewpoint - Tesla's upcoming fourth-quarter production and delivery numbers for electric vehicles (EVs) are critical for stock performance, as EV sales constitute 79% of total revenue, making it essential for investors to assess the company's performance before the announcement on January 2 [1] Group 1: Competition and Market Challenges - Tesla faces significant competition from low-cost EV manufacturers, particularly in China, where companies like BYD offer models at $10,000, which Tesla cannot compete with at that price point [2] - The overall demand for EVs appears to be softening, with traditional automakers like Ford and General Motors reducing their investments in the EV segment, indicating a challenging market environment for Tesla [7] - Tesla's deliveries for the first three quarters of 2024 are projected to decline by 2.3% year-over-year, marking the first annual decline since the launch of the Model S in 2011 [6] Group 2: Financial Performance and Valuation - Tesla's stock is currently trading at a price-to-earnings (P/E) ratio of 125, making it one of the most expensive large-cap tech stocks in the U.S., significantly higher than the Nasdaq-100 technology index's P/E of 33.9 [10][18] - Despite a strong stock performance year-to-date, the core business is struggling, with deliveries on track to shrink in 2024, raising concerns about the justification for the high stock valuation [10][12] Group 3: Future Prospects and Innovations - Tesla is focusing on its full self-driving (FSD) software, which is seen as a transformative opportunity, with estimates suggesting it could represent a $1 trillion market for the company [8][17] - The Cybercab, an autonomous ride-hailing vehicle, is expected to enter mass production in 2026, but the lack of a low-cost EV and uncertainty about growth sources raise questions about future delivery increases [3][19] - Investors are optimistic that the incoming administration will create a more favorable regulatory environment for FSD approval, which could unlock significant value for Tesla [9][17]