A renowned Tesla bull and Managing Partner of Future Fund, Gary Black, has reiterated his belief that advertising could be the key to jumpstarting Tesla Inc.’s (NASDAQ: TSLA) sluggish volume growth.
The conversation surrounding Tesla’s advertising approach was sparked by a social media post from a Tesla influencer, highlighting the prioritization of Cybertruck deliveries to celebrities over customers who preordered before them. The influencer argued that these celebrities, with their large social media followings, provide free advertising for Tesla when they post pictures with the vehicle, potentially driving traffic to Tesla’s website and promoting awareness of its products.
In response to this discussion, a social media user tagged Gary Black, suggesting that in an era where damn revolutionary products can garner attention without traditional advertising, Tesla might not need to spend on ads.
However, Black proposed a dual approach: leveraging celebrity endorsements and investing in advertising to expand Tesla’s Total Addressable Market (TAM) beyond electric vehicle (EV) users. He wrote,
“Why not do both? Get celebs and athletes to show off the Cybertruck for free, plus advertise your other products to expand your TAM to non-EV users? $100M in ad spend in lieu of $1B in price cuts seems like a great deal for $TSLA.”
Tesla Price Cut Strategy Backfires
Tesla (NASDAQ: TSLA) has been grappling with slowing volume growth, exacerbated by higher interest rates affecting consumer spending. The company’s strategy of implementing a series of price cuts since the beginning of 2023 failed to stimulate demand as intended but resulted in margin erosion.
Consequently, Tesla’s stock performance has suffered. TSLA shares have dropped by more than 31% year-to-date. Analysts remain cautious about the company’s outlook, anticipating continued pressure on the stock until Tesla launches a sub-$30,000 vehicle to attract a broader consumer base.
The flagship exchange-traded fund (ETF) of the Black-run Future Fund, known as FFND (Future Fund ETF), has significantly reduced its stake in Tesla recently.
Tesla (NASDAQ: TSLA) Stock Reaction
TSLA stock inclined 2.53% to close at $175.66 on Wednesday. The traders had exchanged hands with 82,926,323 (82.92 million) shares compared to the average daily trading volume of 105.25 million.
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