The Electric Vehicle Industry Turmoil
The electric vehicle (EV) industry has hit a significant rough patch in 2024, with market leader Tesla (TSLA) feeling the sting. From supply concerns to flagging demand, the ongoing EV price war has left many players reeling. Some EV startups are even folding under the pressure.
Tesla’s Trials and Tribulations
Concerns over slower volume growth forecasts and delays in new model launches have left investors and analysts underwhelmed with Tesla’s performance. Among a backdrop of Chinese market challenges, competitor BYD is starting to outshine Tesla on its home turf.
Adding fuel to the fire are Elon Musk’s controversial antics and a recent suspected arson attack at Tesla’s German plant. Once a Wall Street darling, Tesla now finds itself on the outskirts of mega-cap leaders.
Tesla Stock Sells Off
Tesla’s stock has plummeted by 34.2% year-to-date, making it the worst-performing stock in the S&P 500 Index for 2024 so far. This decline translates to shedding approximately $269 billion in market cap, equivalent to the entire market value of Netflix.
Despite the fall, Tesla’s stock is trading at a relative bargain but still commands a hefty premium compared to other auto stocks. Analysts are debating whether Tesla’s valuation should be realigned to match industry standards, especially after Musk hinted at linking progress in AI and robotics to his voting stake size.
What Do Analysts Expect for TSLA Stock?
Analysts have been making bearish moves on Tesla, with Wells Fargo downgrading the stock and slashing its price target. Another analyst labeled Tesla a ‘2027 story,’ indicating pessimism about the company’s future performance.
Analysts Divided Over Tesla’s Future Amidst Stock Volatility
Opposing Views on Tesla’s Trajectory
As Tesla steers towards its cheaper, next-gen model, analysts find themselves split on their outlook for the electric vehicle manufacturer. While McNally advocates to ‘hold,’ Bernstein’s Sacconaghi remains steadfast in his ‘sell’ rating and a price target of $150. Sacconaghi’s bearish stance is bolstered by his past prediction in December, where he foretold a 40% downside for Tesla.
Optimism in the Midst of Pessimism
Despite the somber sentiments from some analysts, others like Dan Ives of Wedbush are painting a brighter picture for Tesla. Ives recently espoused a bullish narrative, suggesting that the stock’s sell-off has been overblown. He optimistically predicts that Tesla’s value could soar to over $1 trillion, representing a significant 92.6% premium above Friday’s closing price.
Varied Predictions in the Mix
Adam Jonas from Morgan Stanley comes in with a price target of $320, slightly revising down from $345. Jonas, while acknowledging concerns about Tesla’s electric vehicle business, sees Tesla as a multifaceted entity encompassing automotive, energy, AI, and robotics industries.
Consensus and Market Projection
Amidst this contrasting landscape, analysts find themselves wavering, shifting the consensus rating for Tesla from a ‘moderate buy’ to a ‘hold.’ However, the average price target of $214.31 implies a potential upside of approximately 31% from the recent closing price.
Tesla’s current valuation metrics are intriguing, with a price of 37.58 times projected 2025 earnings and 3.92 times anticipated 2025 sales. These numbers could attract bargain hunters, although the stock may be best suited for investors prepared to weather heightened volatility.
