Author | Shenpeng
3 weeks, low rebound 60%!
Tesla's strong rise shows that despite the major doubts and difficulties it encountered not long ago, Musk successfully broke the game with only one trick - price reduction.
On January 26 (Beijing time), Tesla announced its financial report, and the net profit in the fourth quarter of 2022 exceeded market expectations, and overnight in the US stock market, Tesla rose nearly 11% strongly, and the stock price returned to the $160 mark.
History has repeatedly proved that a bad company, no matter how crazy the stock price speculated, will eventually fall, and a good company, even if the stock price collapses, will eventually come back.
Tesla belongs to the latter.
01
Buy at the time of the boom of artillery fire
Investing in stocks, excess returns often come from contrarian operations.
In Buffett's words, others fear me greedy, others greed me fear.
I understand the truth, but it's not easy to actually do it.
In December last year, Tesla's stock price suffered a crash-like decline, within a month, on the news, none of them are good, Musk's acquisition of Twitter is in a deep quagmire, to sell Tesla shares to Twitter to continue life, sales pressure is increasing, the problem of insufficient orders continues to appear, and it is also revealed that the Shanghai factory was forced to stop work, coupled with Tesla's own "black" physique, the media stepped on a few feet unceremoniously.
By early January, the situation had not improved, but had worsened. First, Q4 deliveries were less than expected, and full-year deliveries did not complete the 50% growth target, and the already fragile market nerves were once again hit hard, falling by more than 15% in a single day.
Immediately afterwards, Tesla China launched the largest range of price reduction promotions, and the two main models were directly lowered to the lower limit of domestic cars of the same class, and even lower than some domestic cars.
If you follow simple linear thinking, price reduction is the best evidence that you can't sell, Tesla should continue to fall, running or short are the best choices. At this time, the media also wanted to seize the golden opportunity and sing overwhelmingly. In such an atmosphere, it is easy for investors to sell stocks and cut their meat out of the market.
However, on the day Tesla officially announced the price reduction, that is, on January 6, we published the article "Century Bottom Tesla", which stood on the opposite side of most media and investors, and we believe that this is the best opportunity for Tesla to dig the bottom.
In the U.S. stock market that night, Tesla had a dramatic scene. It opened more than 5% lower, then the stock price fell to 101, the whole process took less than 10 minutes, and then all the way up, closing in the red, up 2.47%.
Since then, Tesla's stock price has started a strong rebound journey, which also confirms our judgment: although the price reduction is forced by insufficient orders, gross margin, bicycle profit will be affected, but at the same time, the price reduction can obtain more orders for Tesla, making Tesla stand out in the increasingly fierce competition, and most importantly, Tesla's strength, product power, and financial level support Tesla to win more market share through price reduction.
This is exactly what contrarian investing thinking is informed, and the darkest moments are often pregnant with huge opportunities, just whether you can see the pearl and make a big bet.
It is conceivable that the investors who went long Tesla on January 6 have probably made a lot of money, and some have even become wealthy.
02
The art of bottoming
As Silicon Valley Iron Man, Musk has no shortage of believers.
Although the news media is extremely harsh on Tesla, in fact, there are many more people who recognize Tesla, and their admiration for Musk is more than that of Jobs.
After all, Jobs is only an extraordinary achievement in the field of information technology, and Musk is a person who can build rockets to the sky. Even compared to information technology, Musk is surpassing Jobs, such as Jobs made a smartphone operating system, while Musk did automatic driving, Starlink, artificial intelligence.
Because of this, in Tesla's wave of big falls, many people are copying the bottom, but because the timing is not right, the more and more falling, and finally the receiver is born alive.
This raises the question, when is the right time to copy the bottom?
Did the stock price fall by 50%, or 90%?
Looking back at the last epic financial crisis, that is, in 2008, technology stocks were also hit hard, Apple, Amazon, Microsoft, Google, without exception, but coincidentally, the largest decline stopped at about 70%. Although it cannot be called a rule, for a strong leading company, the stock price retracement of 76%, no matter what the situation, you should think backwards, whether it is over-falling.
In fact, for a company like Tesla, the noise of the media is very large, and it is almost a one-sided crusade, because Tesla does not pay media public relations fees, coupled with the destruction of competitors, Tesla has never taken much advantage of public opinion. Many people make bad investment decisions, mostly because of these noises.
Therefore, if you want to succeed in the bottom of the bottom, you must first have the ability to think independently and put an end to the clouds of people.
Of course, the most important principle of bottom-reading can be summarized into two principles.
One is whether the bearish factors have been exhausted, and the other is to return to the most practical performance level.
Tesla's rebound during this period, the main reason is that the profit is exhausted, at least in these three weeks, we have not seen negative news about Tesla, Lao Ma also personally came out to explain that he will not sell Tesla shares again, although he has had the experience of beating himself in the mouth before, but it is better to come out to do positive guidance than to give the market the opportunity to guess wildly.
The good news is constantly released, the business hall is crowded after the price cut, the website is down, the pickup truck is about to be mass-produced, and new models and new car platforms are about to appear...
At the performance level, Tesla can be described as good news, after the price cut, sales soared, is already a fact, Musk showed at the earnings conference that January sales have been twice the production capacity, from worry to not worry, Tesla only took 3 weeks to turn things around; The earnings reports just released all exceeded market expectations.
Good sales, good performance, and the stock price has fallen so much, what else is there to fault?
Some people are concerned about the impact of price cuts on Tesla's profitability, but if Tesla and Musk are well understood, the problem is not big.
One of Tesla's advantages is the cost control ability, and this control ability is naturally produced after the scale effect is large to a certain extent, and more importantly, it is achieved through innovation, such as integrated die casting, after making it, everyone feels that it is not remarkable, but it is this integrated die casting, so that 171 body parts can be compressed into 2, greatly reducing the material and production costs of the vehicle; Another example is Tesla's super factory, the application of a large number of robotic arms and intelligent production procedures, which has greatly improved production efficiency.
This cost control ability is unique to Tesla, others can copy integrated die-casting, can copy robotic arms, but they can't copy Tesla's innovation ability, can't copy Musk's brain, only these capabilities in, Tesla can continue to innovate more new methods of cost control, and continue to lead peers.
And Tesla's future still has a lot of imagination, it can be a car company, it can be a software company, it can be a mobility company, an artificial intelligence company, a robot company...
All in all, you can never simply apply a traditional valuation model to figure out where its reasonable valuation is.
Looking around the world's technology companies, it is difficult to find another company that is so imaginative, and at the same time has huge room for growth, and Tesla has turned a lot of the impossible into a possibility, it must not call it a PPT company, it should be a company that has both imagination and can hand over performance and earn money.
Only by understanding these and believing from the bottom of our hearts can we break through the fog of the market and successfully cut the bottom.
03
The next bottom-hunting opportunity
This year, many people are optimistic about Hong Kong stocks and A-shares, and international investment banks have also sung about the Chinese stock market.
There is no doubt that after an extremely difficult 2022, the full liberalization of the epidemic and the overall tone of the economy, the strong recovery of China's economy in 2023 is a foregone conclusion, and with this support, the Chinese stock market has the momentum to rise.
However, after these months of catalysis, the rise of the Chinese stock market has reflected this expectation, I believe that the Chinese stock market still has the momentum to continue to rise, but if it comes to bottoming, it is not a good choice, because it has already bottomed out, it does not matter to the bottom, but it is a US stock, which is very worthy of attention.
The reason is simple.
First of all, U.S. stocks are still at a low level, especially the Nasdaq, which fell from a high of 16,000, and although it rebounded during this period, it was still in the position of more than 11,000, and the decline was still nearly 30%.
Second, the U.S. economy is likely to have a recession this year, and stock prices are low enough only when the economy is bad. In fact, many U.S. technology companies and financial companies have already started layoffs in response to the recession.
If you simply think linearly, layoffs are, of course, difficult to do business, and money is difficult to earn, so the stock price will fall. But thinking about it backwards, the conclusion is the opposite.
Layoffs can effectively reduce costs and preserve profits, and only if profits can be preserved, stock prices will be supported. More importantly, in the past year, many U.S. stock companies, especially technology stocks, have played out various ghost stories, performance thunderstorms, stock price retreats, low valuations, such as Apple, Google, meta and other large technology companies, valuations are only about 20 times, some even less than 20 times, has been quite cheap. Even if there is a recession, the probability is already reflected in the valuation retracement.
Although the growth rate cannot be compared with the peak, the fundamentals of these companies are still very solid, profitability, financial position, etc. are not bad, once the recession bottoms, these companies are the first to enjoy the rebound.
In addition, the Fed's interest rate hike has come to an end, although from time to time hawkish officials say that they want to raise interest rates to 6%, 7%, but look at the inflation data is falling step by step, the recession has also appeared, is this what the Fed wants?
As long as the inflation data continues to fall, there is no need for the Fed to toss around, and ending the interest rate hike cycle as soon as possible is the best option for the economy. It can be said that the liquidity problems that have plagued technology stocks for more than a year have been greatly alleviated.
The stock market would have reflected the physical operation in advance, and now that the situation is the case, what reason is there to continue to be bearish on technology stocks?
Tesla's best bottom-hunting opportunity has passed, but other high-quality technology stocks, there are still many opportunities, this time do not miss it.
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