Investing in Tesla with a Diversified Approach using ETFs
Tesla’s Challenging Start in 2024
Tesla, the giant in electric cars and technology, faced a difficult start to the year in 2024, with a significant decline in both profits and revenues.
Financial Performance Overview
In the first quarter of 2024, Tesla experienced a drastic 55% decrease in net profits, amounting to $1.13 billion, or 45 cents per share, well below analysts’ expectations of at least 51 cents per share.
Total revenues also dropped by 9% compared to the previous quarter, standing at $21.3 billion against the expected $22.15 billion.
This represents the sharpest revenue decline since 2020 and a new low since 2012.
Key Factors Behind the Weak Results
One of the contributing factors to these disappointing results may be Tesla’s price reductions to boost demand in an increasingly competitive and saturated market.
While this strategy may have increased sales volume, it evidently eroded profit margins.
Moreover, production costs remained high, exacerbated by fluctuations in raw material costs and expenses related to production line restructuring.
CEO Musk’s Response and Future Plans
During the first-quarter earnings call, CEO Elon Musk sought to reassure investors by promising major developments.
Musk announced that the production of new models could start as early as late 2024 or early 2025, accelerating the previously planned timeline.
This move is seen as an attempt to reignite interest and enthusiasm around the Tesla brand.
Musk also highlighted investments in artificial intelligence and mentioned negotiations with a major automaker to license Tesla’s controversial Full Self-Driving (Fsd) assisted driving system.
ETFs for Investing in Tesla’s Recovery
Interest in Tesla is significantly reflected in the world of ETFs, especially in those with a considerable exposure to Tesla’s stock.
Among the notable ETFs investing significantly in Tesla are SPDR S&P US Consumer Discretionary Select Sector UCITS ETF, iShares S&P 500 Consumer Discretionary Sector UCITS ETF (Acc), and Xtrackers MSCI USA Consumer Discretionary UCITS ETF 1D.
Comparing ETFs and Tesla’s Market Impact
Each of these ETFs offers a different balance between growth, risk, and returns.
Investors need to carefully consider their risk appetite and overall investment strategy when choosing among these ETFs.
Disclaimer: The information and considerations provided in this article should not be the sole basis for making investment decisions.
Readers are advised to make investment choices based on their risk tolerance and time horizon.
