Former Auto Exec Says Tesla (TSLA) Q1 Numbers Had 'Noise' - Q2 Will Be 'Very Telling'

We recently published a list of 10 Stocks Everyone’s Talking About as Trump Softens His Tone on China. In this article, we are going to take a look at where Tesla Inc (NASDAQ:TSLA) stands against other stocks everyone’s talking about as Trump softens his tone on China.

Investors are desperately looking for signs of a market bottom after going through massive volatility and losses. 3Fourteen Research’s Warren Pies said in a latest program on CNBC that we are getting “close” to a market bottom based on his technical analysis. The analyst talked about key indicators he’s looking for:

“I do think that the White House is trying to deescalate the situation. One of the markers we’ve seen is that Peter Navarro hasn’t been on TV since April 13th, and that’s corresponding with this equity rally. Setting that aside, though, I think that a bottom, a confirmed bottom, has two components. You need to see washed out sentiment and positioning. We measured that in a number of ways: we measured it in inverse ETFs for retail, we measured it for vault targeting for institutions, and CTAs for trend followers. Across all those metrics, sentiment is depressed. That’s phase one of a bottom. Then, you look for technical confirmation. Philosophically, we’re always going to be late because of that ordering.”

READ ALSO 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In

For this article, we picked 10 stocks investors are currently focusing on. With each stock, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Tesla Inc (NASDAQ:TSLA)

Number of Hedge Funds Investors: 99

Mark Fields, former Ford CEO, said in a latest program on CNBC that there was a lot of “noise” for Tesla Inc (NASDAQ:TSLA) when it comes to the first-quarter delivery numbers amid the company’s refresh of Model Y and “reputational” issues. The executive believes the second-quarter delivery numbers will show an accurate picture of the company’s business health:

“There was a lot of noise in the quarter for Tesla, right? Because, you know, their sales were down 13% year-over-year. They’ve been kind of losing share, at least on registration data, in all their major markets—whether it’s China, Europe, or the U.S. I think in the quarter, you had a couple of things going on. One is they were refreshing their Model Y, which is their bestselling vehicle, so they had a lot of changeover in their four plants around the globe. That took out production. And then there’s the other piece, which is, you know, how much reputational damage has Tesla incurred because of Musk’s involvement with the Trump administration?

So I think there was a lot of noise in there. I think the second quarter is going to be very telling because you take the noise out of the production interruption that they had in the first quarter, and you really get to see what the true demand is for Tesla—with Musk involved with the Trump administration and the impact on them.”

Tesla’s EV sales are falling all over the world as the company faces challenges from competitors. Even if Elon Musk increases his focus to fix the company’s problems, it would take a lot of effort to come out of the demand crisis. For example, in California, the largest U.S. market for electric vehicle adoption and sales, Tesla sales fell about 12% year over year in 2024, causing its market share to drop from 60.1% in 2023 to 52.5% in 2024. Was it because Californians are buying fewer EVs? No. Californians purchased more than 2 million electric cars during the year, almost double when compared to the past two years.

JDP Capital Management stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q4 2024 investor letter:

“Tesla, Inc. (NASDAQ:TSLA) is new core position that I wrote about in 2024 Half Year Letter. The stock was up 115% in 2024. We benefited from the June 2024 timing of our purchase, buying after the stock had declined about 30% in the first part of the year.

We repurchased TSLA at a time when the market had [again] become overly bearish based on slowing vehicle orders despite the company having just achieved a breakthrough in Full Self Driving (FSD v12). If you haven’t had a chance to experience the most recent Full Self Driving software (FSD 13.3) I suggest you try it for yourself. If you’ve had a Tesla for a while, you know that the trajectory of FSD improvement has been nothing less than astounding.

It has become clearer to me that Tesla’s leadership position in the infrastructure layer underpinning mega-trends in robotics, smart vehicles and battery storage will unlock earnings growth that we can ride for years. Similar to AWS or the iPhone, Full-Self-Driving and Optimus will enable new business models to be built across a wide range of industries over time…” (Click here to read the full text)

Overall, TSLA ranks 7th on our list of best mid cap growth stocks. While we acknowledge the potential of TSLA, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.