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Forecasting stocks is the financial equivalent of trying to hit a pitch by New York Mets pitcher Jacob deGrom.
Stock analysts do their best to incorporate all public data into a reliable forecast, but guessing the exact trajectory of a company’s stock will always be extremely difficult. However, stock market forecasts can still be useful for gaining a consensus opinion on a particular company and gathering insights on potential catalysts or headwinds.
Tesla Inc. (NASDAQ: TSLA) will always be a controversial business thanks to CEO and chief provocateur Elon Musk, but there’s no denying the company’s potential. And there’s no shortage of analysts with opinions on the stock. Here’s how they read it today.
What is Tesla?
Tesla is an automaker specializing in electric vehicles (EVs). The company also develops and manufactures batteries and solar panel technologies for home use. Tesla is one of the only companies in the world with a market capitalization exceeding $1 trillion.
Musk runs the company, but contrary to popular belief, he didn’t create it. Tesla, named after the famous inventor, was first incorporated in 2003 by Marc Tarpenning and Martin Eberhard. Musk joined the company in 2004 after cashing in his PayPal Holdings Inc. (NASDAQ: PYPL) profits and pumps $6.5 million into the fledgling automaker.
TSLA began trading with its initial public offering (IPO) in July 2010. By then the company had started production of its Roadster model, but its first major success came in 2012 with the Model S sedan.
Today, the company still makes the Model S, but has also added the Model 3 compact car, the Model X luxury SUV and the smaller Model Y SUV. The Model 3 is the cheapest car the firm has ever produced. offered with a manufacturer’s suggested retail price of $39,990.
Analyst Ratings for TSLA
The most recent note from TSLA analysts: As you can see from the chart, analyst price targets for TSLA are not exactly uniform. Since the start of 2022, 12 different companies have provided analysis and price targets on TLSA shares, most recently Daiwa Capital Markets. Daiwa has an outperform rating on the stock, but a price target of $900, which would mean an 18% drop from its current levels. Yes, an 18% lower price projection but a note of outperformance – the folks at Daiwa aren’t exactly optimistic right now.
What is TSLA’s price target? Usually, with large-cap stocks, analysts’ price targets hover around the same range. Some may be more bullish or bearish than others, but it’s rare to see one analyst predicting a 60% decline while another predicts a 20% increase.
However, Tesla breaks the mould. The highest price target on TSLA stock comes from Piper Sandler Co. (NYSE: PIPR), which gave the stock an overweight rating in February with a $1,350 price target. That would be a 23% increase from here.
At the other end of the spectrum is Citigroup Inc. (NYSE: C), which has an underweight rating on the stock but on January 27 raised its price target at $313. No, that price isn’t missing a zero – Citigroup predicts the stock will drop 72%. And it’s not the only company that’s bearish on Musk and company. Barclays (NYSE:BCS) and JP Morgan Chase & Co. (NYSE: JPM) also have price targets on the stock that represent a drop of more than 70%.
When is the next TSLA assessment due? TSLA is expected to release its results on April 25. In its latest report for the fourth quarter of 2021, the company exceeded expectations by 12%. Analysts should have updated price targets and ratings after Tesla’s next conference call.
What are the most recent TSLA guidelines? Musk is optimistic about his company’s prospects for 2022. He expects sales to grow by 50% in 2022 thanks to his new Berlin Gigafactory and increased production from other existing factories.
Key statistics for TSLA
When predicting the future movement of a stock, it is important to understand a few key statistics. The goal of any public company is to grow and make money, but using profitability and valuation numbers can help analysts better determine the performance of these companies.
Yield gain: A stock’s price-to-earnings (PE) ratio is often used for analysis, but earnings yield is actually the inverse of this measure. To find the earnings yield, divide the company’s 12-month earnings number by the stock price. The current yield at TSLA is 0.45%.
Gross margin: It is true that it takes money to make money, but using it inefficiently is a bad sign for any business. Margin analysis is a good way to predict a business’ chances of becoming (or staying) profitable because it measures how efficiently it spends its money. A company’s gross margin can be found by taking its revenue and subtracting the cost of goods sold (COGS). At the end of 2021, TSLA posted a gross margin of 27.35%.
Operating margin: The expenses that a business incurs to run its day-to-day operations are called operating costs. Some common operating costs include marketing materials, sales presentations, and equipment depreciation. Operating margin removes these costs from revenue to measure how well a business manages its day-to-day finances. Tesla reported an operating margin of 14.75% at the end of 2021.
The net margin: To find a company’s net margin, take its revenue and subtract all expenses, not just COGS or operating expenses. Net margin will always be less than gross margin and operating margin, because net margin takes into account taxes, depreciation, interest, administrative costs, and other fixed and indirect expenses. TSLA’s latest net margin figure was 13.1%.
Electric vehicles continue to see widespread adoption, but Tesla isn’t the only company bringing electric vehicles to market. Here are some publicly traded competitors to watch out for.
Rivian Automobile Inc. (NASDAQ: RIVN) is one of the newest companies in the electric vehicle space, having entered the public markets last October. Rivian’s flagship vehicle is its five-passenger R1 truck, but the company is also developing battery technology, vehicle electronics and an advanced driver assistance system called Driver+. Amazon.com Inc. (NASDAQ: AMZN) also owns a minority stake in Rivian.
Ford Motor Co. (NYSE:F) is one of the oldest automakers in the world and owns both Ford and Lincoln luxury brands. Ford trucks are still among the best-selling vehicles in America, but the company has also focused on electric vehicles, with its Mustang Mach-E and Lightning F150 trucks. Ford has also installed one of the largest charging networks in the country with more than 19,000 operational stations.
General Motors Co. (NYSE:GM) is another historic automaker joining the electric revolution. GM owns a number of recognizable brands like GMC, Chevy, Buick and Cadillac. GM plans to make a variety of electric vehicles and has the financial backing to make those plans a reality. Current vehicles include the Chevy Volt and upcoming Chevy Silverado EV, Cadillac Lyriq and GMC Hummer. Yes, they make an electric Hummer.
It’s impossible to talk about electric vehicles without mentioning Chinese companies, led by companies like Nio inc. (NYSE: NIO). Despite the recent crackdown in Beijing, EV makers like Nio and Xpeng Inc. (NASDAQ: XPEV) should still produce viable models in the car and truck segments. Just be sure to exercise caution and research diligently when considering stocks subject to tight regulatory controls, such as Chinese automakers.
Frequently Asked Questions
Is TSLA a good stock to buy now?
Is TSLA a good stock to buy now?
Analysts are mixed on TSLA shares. So far in 2022, TSLA has received five buy ratings, three neutral or hold ratings, and four sell ratings. However, of the 12 analyst reports released so far in 2022, only three forecast the stock price to rise from current levels. The highest price target was $1,350 from Piper Sandler and the lowest was $313 from Citigroup.