Tesla Stock: Path To $2,500 By 2025 NASDAQ:TSLA

You would think that after such a blockbuster report, the company’s stock price would fly higher and break out to new ATHs. We saw an initial jump to $1,200, but a sharp reversal briefly knocked shares to below $1,000. It’s important to note that this abrupt correction of around 20% essentially began when the Fed’s hawkish minutes came over the wire. Therefore, the recent pullback in the stock was not Tesla related but resulted from a broader stock market decline. Now that market conditions appear to have stabilized, the company’s stock should recover and proceed higher into Q4 earnings.

For comparison’s sake, we chose to use the Fidelity Nasdaq Composite Index Fund (FNCMX), an index fund that aims to mirror the price and returns of the Nasdaq Composite Index. Tesla has faced challenges over the past 12 months, but it still has delivered significant returns over the last five years. Tesla’s stock had a meteoric rise through the previous decade, and easymarkets review TSLA reached over $400 per share in October 2021. Its total revenue was $81.46 billion, up $27.64 billion from the previous year. Those who already own it can consider holding it for the long term if they can handle the potential volatility in the short run. But as competition heats up, its growth trajectory may be tempered relative to the company’s history.

Once we approximate Tesla’s revenues, gross margin, and expenses in other businesses, we can estimate what the company should deliver in revenues and EPS for the fourth quarter. Remarkably, Tesla’s deliveries have surged by more than 1,100% over the last five years. Given the company’s past performance and rapid anticipated growth, we should continue to see substantial delivery increases in future years.

A quick word on Tesla’s share price

It’s worth noting that in 2020 the company was able to increase sales in Europe and China while adding a fourth vehicle to production, the Model Y. Tesla also recently announced that new factories in Berlin and Austin could finally ramp up production. According to the Q2 earnings report, the Berlin factory produced 1,000 vehicles in one week, a significant milestone for Tesla. In previous articles, I’ve mentioned that analysts have often been asleep at the wheel on Tesla.

The mid-range is $2.28, while higher-end estimates go all the way up to around $3. My EPS estimate is $2.66, which is about 17% above consensus figures, representing a 233% YoY EPS increase. Analysts polled by Visible Alpha forecast that Tesla will deliver 2.2 million units in 2024. Compared to the 37% growth between 2022 and 2023, Tesla’s growth in 2024 is expected to be slower. If things go well, we’ve got a shot at 2 million vehicles this year, but that is the upside case. And we feel comfortable with 1.8, and we’ll see how this year unfolds,” Musk replied to a question from Goldman Sachs’ Mark Delaney.

The conversion of Bitcoin to cash led to the company adding $936 million to its balance sheet. However, the cost of the energy revenue for the year was $2.91 billion, leading to a $129 million loss in this sector. The company recently announced that it’s ramping up production at the dedicated Megapack factory to match the increasing demand for storage products. Still, demand for storage products is currently more than the supply. Until recently, the car factories in Texas and Berlin were losing billions of dollars due to a shortage of batteries and other supply chain issues in China (pandemic restrictions actually closed the factories temporarily). “Tesla candidly admitted the company is now in an intermediate low-growth period,” Deutsche Bank analyst Emmanuel Rosner wrote in a note, citing a meeting with Investor Relations Chief Martin Viecha.

Get Forbes Advisor’s expert insights on investing in a variety of financial instruments, from stocks and bonds to cryptocurrencies and more. From June 1, 2018, to June 1, 2023, the price of the FNCMX increased from $99.46 to $163.68—a 65% increase over five years. Compare Tesla’s performance to that of the Nasdaq Composite index, which tracks the performance of 3,000 stocks listed on the Nasdaq exchange.

Challenges and Opportunities Facing Tesla

This could be a major catalyst for lifting investors’ confidence and helping Tesla’s still-lofty valuation premium weather through the looming macro storm. The 4680 battery cells also boast better economics, which could further jack up its auto margins over the longer-term as production ramps up, and overshadow near-term concerns on profitability. Tesla delivered 308,600 total vehicles last quarter, a whopping 72% increase over last year. This report considerably topped consensus estimates for 267,000 total vehicles. Tesla’s stellar results indicate that demand for its cars remains highly robust. Moreover, the company’s production capacity continues to expand, implying that Tesla’s revenues should grow substantially in future years.

Therefore, Tesla sold around 9,753 cars in its Model S/X segment last quarter. Tesla’s Model S/X segment average selling price (“ASP”) has increased recently. Using this ASP provides us with an approximate $1.12 billion in revenues for Tesla’s luxury upscale segment. Europe Headwinds- Elevated ramp-up costs over the near-term pertaining to Tesla’s Berlin and Texas facilities is another near-term consideration that could compound its profit risks. This, again, compounds concerns for underutilization of capacity in the near-term for Tesla – Europe’s making its own Tesla vehicles in Berlin, while excess units from Shanghai are also being shipped to the region that is now facing an impending slowdown.

1. In addition, competition has intensified in the last few years as the incumbents auto industry have introduced more EV models.
2. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation.
3. In a 2018 televised interview, she said Tesla would hit $4,000 by 2023.
4. It sold 1.3 million vehicles in 2022, but that number was lower than the required amount to meet Musk’s pledge of growing deliveries by 50% nearly every year.
5. According to the company’s annual report, it has never paid dividends, nor does it anticipate paying dividends in the foreseeable future.

Let’s take a closer look at Tesla’s growth potential in the coming decade, and beyond. Aside from the constant swirl of buzz that surrounds Tesla’s founder, the recent stock split and Inflation Reduction Act have drawn more eyes to the electric vehicle (EV) maker than normal, which is saying alvexo review something – something substantive for a change. Since we have already taken a deep dive into the financials behind the Tesla stock split, we wanted to look at the company’s financials and revenue streams to see how the actual business, the fundamentals of the operation, have been performing.

Tesla then turns around and sells these credits to other automakers in the field, like General Motors GM for instance. Critics are quick to point out that these competing automakers will eventually figure out how to create electric vehicles without the support of Tesla’s regulatory credits. In the Model 3/Y segment, leasing accounted for about 5% of deliveries. Therefore, last quarter, Tesla sold roughly 282,000 vehicles in its Model 3/Y unit. Implementing an ASP of $50K implies that Tesla derived approximately $14.1 billion in revenues from the Model 3/Y segment last quarter.

Operating Margin

(Expectations are “updated” because analysts typically revise them once Tesla publishes its production and delivery report.) The stock only lifted after the fourth quarter, 2022 earnings release—when Tesla’s reported $1.91 EPS grew 40% from the prior-year quarter. Sales revenue increased 52% from the prior year as the company increased deliveries of its Model 3 and Model Y vehicles. And revenue from automotive regulatory credits increased by 21% from the prior year.

What Is TSLA Stock’s Price Prediction For 2025

The near-term pains in Europe are further corroborated by the region’s muted auto sales trends, which remain “far below what was considered normal operating volume pre-pandemic…[with] manufacturers starting to see signs consumers are taking a pause”. The combination of rising interest rates and persistent inflationary pressures are starting to chip away at American household savings, which has fallen from an average of 3.5% in the second quarter to 3.1% in the third quarter. An increasing volume of the population is also turning to credit card spending, with related short-term debt approaching $900+ billion in September. Meanwhile, buying behaviour is starting to favour necessities and services over big-ticket products like new vehicles. This points to a tough demand environment over coming months for Tesla, as its core market in the U.S. reels from the increasingly prominent aftermath of deteriorating consumer sentiment and purchasing power amid tightening financial conditions. The Fed’s trajectory on monetary tightening to quell the biggest pace of price increases in four decades continues to add uncertainty on when the ongoing valuation correction that has roiled markets this year will cease.

Time and again during the past year’s bear market when investors needed him most, Musk has left his promise to “be the last one to sell Tesla” on the back burner. His stake in Tesla has fallen from 23% (including stock options) to 14% over the same period. Around this time in 2021, many experts wondered if Tesla could still turn a profit solely from automobile sales instead of relying on emission credits. However, an expansion into China led to a $5.51 billion profit on automobile sales while delivering 936,172 cars in 2021, up from 499,550 vehicles in 2020.

Notably, analysts lowered its expectations after Tesla shared the disappointing production and delivery figures in early October. Ninety days ago, the consensus EPS estimate for Tesla’s third quarter was $0.88. Bernstein analysts also back their prognosis by pointing toward market saturation and the ever-increasing competition in the EV industry. They conclude that much like Tesla had to implement price cuts in 2023 to keep up, it will have to reduce the cost of its vehicles even more in 2024. To meet its delivery targets, Tesla will have to ramp up its manufacturing capabilities in its facilities in both the United States and abroad.

Is this recent strength building towards a new high stock price for Tesla TSLA in 2025? Read on to learn where Tesla’s opportunities lie and what challenges it faces going forward. The Motley Fool owns shares of and recommends Tesla and Volkswagen AG. cmc markets broker review First, the company is focused on advancing its autopilot and Full Self-Driving (FSD) features. To attract the best AI talent, Tesla hosted an AI day event in August. Notably, attracting the best talent is key for Tesla to lead on the FSD front.

Provided Tesla’s deliveries numbers and my ASP estimates, we arrived at $15.3 billion in revenues for Models S/3/X/Y sales alone. Once we added $450 million in leasing and $400 million in regulatory credit revenues, we came up to $16.15 billion in total automotive sales revenues. After we computed energy generation and storage plus Tesla’s services and other segments, we arrived at an $18 billion revenue figure for Q4. The company delivered 11,750 Model S/X vehicles, of which 17% were subject to lease accounting.