Tesla’s stock performance this year is eerily similar to its trajectory in 2019, according to Gary Black, managing partner of The Future Fund LLC. Black, known for his bullish stance on Tesla, believes the similarities are striking and offer a warning to short sellers.
Just as Tesla was gearing up for the Model Y launch in 2019, they are now preparing for the release of new, more affordable models, with production expected to begin in the first half of 2025. Back in 2019, short sellers dismissed the Model Y as simply a larger Model 3, expecting it to cannibalize its sales. However, they failed to anticipate the Model Y’s success in the booming CUV category, where it quickly became the top-selling vehicle for Tesla.
Black predicts a similar scenario with Tesla’s upcoming affordable model, which he believes will significantly increase the company’s total addressable market. He anticipates that the new car, priced between $25,000 and $30,000, will become a major hit, defying skepticism from short sellers who claim it will cannibalize the Model 3’s market share.
Black’s argument is that the Model 3 and the upcoming affordable model will target different segments, the former focusing on the affordable sedan market and the latter on a more accessible price point. He expects a repeat of the Model Y phenomenon, with positive earnings revisions driving the stock price higher as the new vehicle gains traction.
Tesla’s second-quarter earnings report confirmed that the new affordable vehicle will share production lines with their existing lineup. While the company has yet to disclose details about the car, Black’s optimistic outlook on its potential is fueled by the successful trajectory of the Model Y, which played a significant role in Tesla’s growth in 2020.
The parallels between 2019 and 2024 are striking. If history repeats itself, Tesla’s stock could be poised for another strong climb, but only time will tell if Black’s predictions will hold true. Investors will be watching closely as the company prepares to launch its new affordable vehicle and expand its reach into a broader market.
