All electric vehicle stocks have fallen rather hard over the past year, and even Tesla (TSLA 1.55%) didn't make it out of 2022 unscathed. The EV leader's share price is down a shocking 47% over the past 12 months, and with a potential recession looming some are wondering whether Tesla's journey involves more potholes ahead.
I think long-term investors are right to identify the potential roadblocks for Tesla, but I also believe the company's recent share price plunge offers a good buying opportunity for long-term investors. Here's why.
Image source: Tesla.
Tesla has enviable sales and earnings
Even amid some difficult times in the EV industry, Tesla reported its highest-ever quarterly revenue of $24.3 billion in the fourth quarter, representing a 37% year-over-year increase.
But that's not the only part of the income statement that potential investors should pay attention to. The company is also profitable, which is nearly an anomaly among EV companies right now.
Tesla's non-GAAP (adjusted) earnings rose by 40% in the fourth quarter to $1.19 per share. And things are impressive on an annual basis too, with net income rising 85% in 2022 to $14.1 billion.
The elephant in the room is that Tesla cut the price of some of its vehicles recently, which could put a temporary damper on the company's earnings.
But while a slowdown in EV demand could be happening right now, there's evidence that the long-term trend for electric vehicle growth is intact. Research from IEA says that by 2030 nearly 60% of vehicle sales will come from EVs.
NASDAQ: TSLA
Key Data Points
Tesla continues to increase production
While other smaller EV companies struggled with production over the past year, Tesla has been able to ride out supply chain issues relatively well.
Vehicle production increased by 44% to 439,701 and deliveries rose 31% to 405,278 in the fourth quarter. On an annual basis, Tesla's deliveries were up by 40% in 2022, reaching 1.31 million vehicles.
And there could be more growth where that came from. The company will likely benefit from the electric vehicle incentives that were included in the Inflation Reduction Act. Additionally, Tesla has other models in its pipeline, including its Semi (which just began a handful of deliveries in late 2022) and Cybertruck, which could help increase vehicle sales as well.
It could be a bumpy ride for a bit
While Tesla has a lot going for it over the long term, it's likely that the stock could experience more volatility in the short term.
For one, Musk's Twitter takeover has been a distraction, and until a new CEO is put into place at the social media company Tesla's shares could be affected by what Musk does at Twitter.
Additionally, a potential recession could slow down some sales in the EV industry or weigh on company profits.
But if you're looking for an EV stock that you can hold onto for the next decade, Tesla looks like a good bet. The company has proved that even during difficult times it can still grow sales, earnings, and vehicle production -- something that many other EV companies consistently struggle to do.
