Is Tesla a high-risk stock?
Tesla Inc (Tesla) has a moderate risk profile and is one of the top fifty companies based on our proprietary risk assessment of vehicle manufacturing sector in the automotive industry. Country and industry risk pillars strengthened the overall risk score of the company.
The electric vehicle (EV) maker, Tesla, has a number of key risks that it will face in the next 5-10 years. Notable risks include Tesla cars being too expensive with tax breaks and that the construction of its Gigafactory (battery factory) taking longer than expected.
Coming into Monday trading, Tesla shares have fallen about 24% year to date. The reporting on Musk is a small factor in the stock drop. Investors are mainly worried about weaker-than-expected growth for Tesla. The company shipped 1.8 million electric vehicles in 2023, up almost 40% from 2022.
Hit by a bruising price war, intensifying competition in North America, Europe and China, and Musk's demands for billions in new Tesla shares, the electric vehicle's stock has plunged this year, lopping roughly $130 billion off its market capitalization.
Essentially, Tesla's current competitors may eventually become the company's partners. As such, with Tesla stock trading below where it stood both one year ago and two years ago, now is the time to bet on a rebound in the next 12 to 18 months.
The brakes will sometime slam without warning. The range is often inflated. Autopilot is a mess. And now, according to Reuters, the suspension and steering columns on “tens of thousands” of Tesla vehicles are experiencing premature failure — sometimes after just a couple hundred miles of ownership.
Firstly, Tesla's cars remain relatively expensive, even with government incentives, potentially limiting their market reach and profitability. Additionally, the company faces challenges related to battery production, with its Gigafactory construction facing uncertainties that could affect its ability to meet demand.
Tesla's (NASDAQ: TSLA) stock is up 135% in 2023, but the company's performance doesn't match the stock. Margins are down, FSD continues to be a year away, and billions are being bet on products that will take years to be proven out.
With its 3-star rating, we believe Tesla's shares are fairly valued compared to our long-term fair value estimate. In 2024, we forecast Tesla will see a far slower growth rate, with deliveries increasing just 10% to a little under 2 million, from a little over 1.8 million in 2023.
Investing in Tesla requires wits, nerves of steel, and a solid framework. That's more true than ever in 2024. We recommended buying Tesla stock in January 2023, arguing, in part, that declines linked to Elon Musk's purchase of Twitter, now called X, and electric-vehicle price cuts were overdone.
What is Tesla's prediction for 2024?
Adding to the challenges, Tesla's management has offered a cautious outlook for 2024. The company anticipates a significant decrease in volumes compared to 2023, falling well below its targeted compound annual growth rate (CAGR) of 50%.
The likely reason for the dip was a lack of firm sales guidance for 2024. Tesla said growth is going to be substantially below 2023's level. Wall Street already expects growth to be lower in 2024. Tesla shipped some 1.8 million vehicles in 2024, up about 38%.
Tesla (TSLA)
Amid the near-term risks and challenges facing Tesla's EV business in 2024, the mean rating on TSLA stock is "hold" with a price target of 241.21, according to FactSet. However, Ives has a 12-month price target of 350 while Jonas has a 380 target.
Tesla Stock 2024 Forecast: Analysts Are Not Too Bullish
Overall, Wall Street analysts have given it a “Moderate Buy” rating, and only 8 of the 27 analysts covering Tesla rate it as a “Strong Buy” while 2 as a “Moderate Buy.”
Is Tesla stock a Buy, Sell or Hold? Tesla stock has received a consensus rating of buy. The average rating score is and is based on 48 buy ratings, 34 hold ratings, and 11 sell ratings.
He forecasts Tesla stock to gain about 550% to hit $1,200 a share by 2030, and for SpaceX to triple in valuation over the same period, according to a recent interview conducted by Bloomberg. Baron runs the Baron Focused Growth Fund, which counted Tesla and SpaceX as its largest holdings as of December 31, 2023.
Assessing Tesla's Financial Strength
Tesla has a cash-to-debt ratio of 3.97, ranking better than 80.87% of companies in the Vehicles & Parts industry. Based on this, GuruFocus ranks Tesla's financial strength as 9 out of 10, suggesting a strong balance sheet.
Who Are Tesla's Top 3 Competitors? Ford, GM, NIO, and Volkswagen are four of Tesla's main competitors. In 2022, the Chinese manufacturer BYD sold more than 1.85 million plug-in electric cars, more than tripling its 2021 result of 593,745.
Overall, Tesla (NASDAQ:TSLA) stock appears to be significantly undervalued. The company's financial condition is strong, and its profitability is fair. Its growth ranks better than 97.03% of 1079 companies in the Vehicles & Parts industry. To learn more about Tesla stock, you can check out its 30-Year Financials here.
Summary. Tesla stock is a good buy despite polarizing media attention and emotional narratives. Tesla's lead in the U.S. market remains dominant, with positive momentum and competitive advantages likely underestimated by consensus.
Why is Tesla stock so volatile?
Tesla is a high-growth company. This means the stock will be extremely volatile based on the market's view of the company's growth trajectory. When the market prices in a higher growth rate, Tesla shares can rapidly rise, but when the market assumes a lower rate, the stock can quickly fall.
Average Price Target
Based on 34 Wall Street analysts offering 12 month price targets for Tesla in the last 3 months. The average price target is $220.26 with a high forecast of $345.00 and a low forecast of $23.53. The average price target represents a 1.04% change from the last price of $218.00.
From a fiscal-2023 base, we forecast Tesla earnings per share grow at a 27% compound annual growth rate through fiscal 2030, achieving $5/share in late fiscal 2025, $10/share in late fiscal 2027, and $15/share by mid fiscal 2029.
Analyst project a solid increase in 2025 to $4.24 a share. However, Wall Street has slashed projections from $5.27 at the end of last year and $6.90 at the end of February 2023.
Tesla Stock Prediction 2025
The Tesla stock prediction for 2025 is currently $ 255.55, assuming that Tesla shares will continue growing at the average yearly rate as they did in the last 10 years. This would represent a 27.81% increase in the TSLA stock price.
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