 Tesla reported latest earnings beating on both earnings and revenue. CEO Elon Musk said that they might be able to produce 2 million cars this year. Investors love this news and the stock shot up more than 30% in just one week. However, compared to its all-time high about a year ago, the stock is still down about 60%. With Tesla slowing sales growth and the company announcing slashing price again by as much as 20%, many investors are worried that Tesla's mode is weakening. So is Tesla still a company that you can invest in? Does the current share price of the company present a good investment entry? In this video, let's deep dive into Tesla to find out more. Hi, Minasang or Kylie, welcome back to my channel. The only one place for you to learn about stocks, investing, as well as options. If it's the first time of you coming to my channel, remember to hit the subscribe button as well as the notification bell so that you will not miss out any of my future investment updates. An early thumbs up is also appreciated because it will tell YouTube algorithm that you find this video helpful and it will help to push out to more people to inspire them to start investing safely. In January this year, Tesla announced to cut prices for the US buyer by as much as 20%. The Model Y starting price is now $53,000 down from $66,000. This is at least the fourth time that Tesla discounted its prices. With such aggressive price cutting, many investors are worried that it will have a direct impact on Tesla's margin SOS profitability. However, if you look closely into Tesla's competitors' margin, such a move might just be what Tesla needs to squeeze its competitors' drive. Currently, Tesla has a gross margin of about 25% and a net margin of close to 15%. This is significantly higher compared to its competitors like Ford or GM, with a gross margin of a low-team digit and a net margin of a low single digit. And the reason why Tesla is able to enjoy such a lucrative margin is due to its supreme branding, economies of scale, as well as vertical integration of production. Tesla produced and designed its own battery cells and electric motors, which allows it to control costs and improve efficiency. It also invests heavily in automation and robotics in the gigafactories, which helps to increase productivity and reduce labor costs. Finally, Tesla's sales and distribution model, which relies mostly on online sales and company-owned stores, also helps to keep the cost low. With such a thicker margin, Tesla is able to afford to lower its prices in order to become more competitive in its pricing. Lowering prices can also attract more customers, which is exactly the move that Elon Musk has been advocating. However, it's not always a bet of roses for Tesla. Investing in this company involves a lot more risk than most investors think. That's why right now we are going to look into some of the risks that you should consider before investing in Tesla. 1. Production and delivery risk Tesla's production and delivery of vehicles can be negatively impacted by a few factors, including supply chain disruptions, quality control, or production delay. But despite of its challenges, Tesla still had the stunning quarter. In Q4 last year, Tesla produced over 439,000 vehicles and delivered over 400,000 vehicles. Vehicles deliveries grew by 40% year on year to more than 1.3 million, while production grew by 47% year on year to 1.37 million. Although the growth is slowing, it's still impressive. 2. Regulatory and policy risk Changes in government regulations and directions can negatively impact Tesla as well. Currently, electric vehicles still remains to be a niche market, although there's a lot of saying that even will be the future of our society and a huge adjustable market in the future. Nothing can be said for sure until it really happens. So if the adoption of EV doesn't go according to plan, investing in Tesla right now could be really risky. 3. Competition risk More and more established automakers are entering this field. As a result, in the past two years, the market share of Tesla has gradually reduced to about 60%. 4. Financial risk In order to stay competitive in its technology, Tesla has been investing about 6-8% of its revenue in R&D each year, amounting to billions and billions of dollars. However, all these investments may not bear fruits, which could dilute the value of existing shareholders and increase the depth of the company. Fortunately, Tesla does have a strong balance sheet and cash able to meet all these financial obligations. 5. Dependence on Elon Musk As we all know, Elon has been a really controversial leader. Its extreme publicity is now acting as a double-agent swap for Tesla. His recent purchase of Twitter also caused him to sell more than $20 billion of Tesla shares, which further dampens investors' confidence towards the company. In just about two years, Elon has offloaded close to $40 billion worth of Tesla shares. Investors are also worried about Elon's ability to juggle between multi-businesses from Tesla, SpaceX, the foreign company, Neuralink, to now Twitter. So the loss of these key personnel can have a direct impact on Tesla's future. So with the raise in mind, let's take a look at the company's valuation. Although Tesla has fallen about 60% from its all-time high, the stock price right now is still not giving investors a good margin of safety. The current P-Ratio is about 50 times, so the stock can be considered overvalued given the uncertain future of EV. However, investors who believe in the future of EV and Tesla could see this company's stock price as an opportunity for entry. In fact, for the past six months, investors have spent more money buying Tesla as compared to the past five years. According to Vanda Research, on 10th January alone, the net purchase of Tesla shares hit a record of $360 million. So in summary, we look at the competitive advantage of Tesla, its risk as well as its valuation. With all these considerations, what's your take on Tesla? Is it a bull or a bear? Comment down below and let me know your thoughts. We truly believe that by understanding what you are investing in and having the right skillset, everybody can become a great investor. If you are wondering how to get started investing in this brand new year and how to use options to accelerate your return on stocks like Tesla, do join us in our upcoming free 2-hour next-level Options Masterclass where you will learn different options strategy to potentially profit and even protect your portfolio in this volatile market. Just click on the link around this video and register for your free spot. In the meantime, don't forget to follow my Telegram channel to get more investing insights. With that, I will see you in the next video. Happy investing!