Lecture Notes: Elf Beauty and Tesla Stock Analysis

Elf Beauty Analysis

Overview

• Elf Beauty stock has experienced mixed sentiments:
  • Personal gain of 623% in public account.
  • Recent buyers may view it as a negative investment due to high volatility.

Stock Price Variability

• Elf stock prices have ranged drastically over time:
  • Previously bought at $7/share, now fluctuating between $49-$200/share.
• Entry timing and dollar-cost averaging are essential, especially for growth stocks.

Impact of Tariffs

• Recent 145% tariffs affected Elf's stock, especially for products made in China.
• Concerns include potential price increases and reduced margins for Elf.
• Market sentiment may shift quickly if tariffs change.

Long-Term Perspective

• Focus on 5-year revenue and net income growth, expecting significant increases.
• Short-term fluctuations (e.g., tariffs) are less important than long-term growth.

International Expansion

• Elf is expanding internationally:
  • Ranked 3rd in the UK and Canada, and 9th in Germany.
  • Retail presence in 15 countries.
• Diversification reduces impact of US-China trade tensions.

Stock Price Projections

• Anticipates a return to $200+ per share in the next 3-5 years.
• Short-term price volatility is seen as an opportunity to buy more shares.

Tesla Stock Analysis

Decline in Core Business

• Tesla's core electric vehicle (EV) business is declining:
  • US market share dropped from 75% to 43% in recent years.
  • Overall vehicle sales volume has decreased despite price cuts.

Competitor Influence

• Increased competition in China, e.g., from BYD.
• Challenges in moving products, even with price incentives.

Growth Categories' Challenges

• Growth in energy generation and storage, and services is slowing.
• Tough comparisons ahead due to previous high growth rates.
• Potential reduction in benefits from Inflation Reduction Act.

Business Purpose and Brand Issues

• Previous mission to promote sustainable energy is less clear.
• Shifts in political alignment may have alienated Tesla’s original supporters (liberals, Europeans, and Chinese).

Brand Perception Challenges

• Negative public perception in key demographics.
• Comparisons to other brand controversies (e.g., NFL, Bud Light).

Conclusion

• Tesla faces multiple challenges: declining market share, brand perception, and growth uncertainties.
• Noted that rebuilding brand trust will be a long-term effort, not easily resolved.