Forecasting stocks is the finance equivalent of trying to hit a thrown by New York Mets pitcher Jacob DeGrom.
Equity analysts do their best to incorporate all public data into a reliable prediction, but guessing the exact trajectory of a company’s shares will always be extremely difficult. However, stock forecasts can still be useful for gaining a consensus view on a particular company and gathering info on potential catalysts or headwinds.
Tesla Inc. (NASDAQ: TSLA) will always be a controversial company thanks to CEO and Chief Provocateur Elon Musk, but there’s no denying the firm’s potential. And there’s no shortage of analysts with opinions on the stock. Here’s how they’re reading it today.
What is Tesla?
Tesla is an automobile manufacturer specializing in electric vehicles (EVs). The company also develops and manufactures batteries and solar panel technology for home use. Tesla is one of the only companies in the world with a market cap that at one point exceeded $1 trillion; today it sits around $670 Billion.
Musk leads the company, but contrary to popular belief, he did not start it. Tesla, named for the famous inventor, was first incorporated in 2003 by Marc Tarpenning and Martin Eberhard. Musk joined the firm in 2004 after cashing in his PayPal Holdings Inc. (NASDAQ: PYPL) profits and putting $6.5 million into the fledgling auto manufacturer.
TSLA began trading with its initial public offering (IPO) in July 2010. By that time, the company had begun production of its Roadster model, but its first major success came in 2012 with the Model S sedan.
Today, the company still manufactures 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 offered with a manufacturer’s suggested retail price of $39,990.
Analyst Ratings for TSLA
TSLA’s most recent analyst rating: As you can see from the chart, the analyst price targets for TSLA aren’t exactly uniform. Since the start of 2022, 12 different firms 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% decline from its current levels. Yes, a price projection down 18% but a rating of outperform — the folks at Daiwa aren’t exactly bullish right now.
What is TSLA’s price target? Usually with large cap stocks, analyst price targets hover around the same range. Some may be more bullish or bearish than others, but it's rare to see one analyst predict a 60% decline while another predicts a 20% increase.
However, Tesla breaks the mold. The highest price target on TSLA shares comes from Piper Sandler Cos. (NYSE: PIPR), which gave the stock an overweight rating in February with a price target of $1,350. That would be a 23% increase from here.
On the other end of the spectrum is Citigroup Inc. (NYSE: C), which has an underweight rating on the stock but on Jan. 27 raised its price target to $313. No, there isn’t a zero missing on that price — Citigroup is projecting the stock will decline a whopping 72%. And it isn’t the only firm 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 more than 70% drop.
When is TSLA’s next rating due? TSLA is expected to report earnings on April 25. In its most recent report for the fourth quarter 2021, the company beat expectations by 12%. Analysts should have updated price targets and ratings following Tesla’s next conference call.
What is TSLA’s most recent guidance? Musk is optimistic about his company’s 2022 prospects. He projects sales growth of 50% in 2022 thanks to his new Berlin Gigafactory and increased output from other existing plants.
Key Statistics for TSLA
When predicting a stock’s future movement, it’s important to understand a few key statistics. The purpose of any public company is to grow and earn money, but using profitability and valuation numbers can help analysts better determine how well these firms are performing.
Earning yield: A stock’s price-to-earnings (PE) ratio is often used for analysis, but the earning yield is actually the reverse of that metric. To find the earning yield, divide the company’s 12-month earnings number by the stock price. The current earning yield at TSLA is 1.3%.
Gross margin: It’s true that it takes money to make money, but using money inefficiently is a bad sign for any company. Analyzing margins is a good way to predict a company’s chances of becoming (or remaining) profitable because it measures how efficiently it spends its cash. A company’s gross margin can be found by taking its revenue and subtracting the cost of goods sold (COGS). At the start of 2022, TSLA reported a gross margin of 30%.
Operating margin: The expenses a company incurs to run its daily operations are known as operating costs. Some common operating costs include marketing materials, sales presentations and depreciating hardware. Operating margin removes these costs from revenue to measure how well a company handles its day-to-day finances. Tesla reported an operating margin of over 19% at the start of 2022.
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 smaller than gross margin and operating margin because net margin factors in taxes, depreciation, interest, administrative costs and other fixed and indirect expenses. TSLA’s most recent net margin figure was 13.5%.
Related Stocks in EV Sector
Electric vehicles are continuing to gain widespread adoption, but Tesla isn’t the only company putting EVs into the market. Here are a few publicly traded competitors to keep an eye on.
Rivian Automotive Inc. (NASDAQ: RIVN) is one of the newest firms in the EV space, having come to public markets last October. Rivian’s flagship vehicle is its R1 five-passenger truck, but the company also develops battery technology, vehicle electronics and an advanced driver assistance system known as Driver+. Amazon.com Inc. (NASDAQ: AMZN) owns a minority stake in Rivian as well.
Ford Motor Co. (NYSE: F) is one of the oldest car manufacturers in the world and owns both the Ford and Lincoln luxury brands. Ford trucks are always among the highest-selling vehicles in America, but the company has also turned its focus to EVs, with its Mustang Mach-E and Lightning F150 truck. Ford has also installed one of the nation’s largest charging networks with over 19,000 operational stations.
General Motors Co. (NYSE: GM) is another legacy car manufacturer joining the electric revolution. GM owns a number of recognizable brands like GMC, Chevy, Buick and Cadillac. GM plans to manufacture a variety of EVs and has the financial backing to make these plans a reality. Current vehicles include the Chevy Volt and the upcoming Chevy Silverado EV, Cadillac Lyriq and GMC Hummer. Yes, they’re making an electric Hummer.
It’s impossible to discuss EVs without mentioning Chinese firms, led by companies like Nio Inc. (NYSE: NIO). Despite the recent crackdown in Beijing, EV manufacturers like Nio and Xpeng Inc. (NASDAQ: XPEV) are still expected to produce viable models in both the car and truck segments. Just be sure to use caution and research diligently when considering equities facing strict regulatory controls like Chinese car manufacturers.
Frequently Asked Questions
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 projected the stock price to increase from current levels. The highest price target was $1,350 from Piper Sandler, and the lowest was $313 from Citigroup.