Tesla stock (NASDAQ: TSLA) has continued its stella run this year as the tech innovator continues to dominate the growing EV industry. Tesla’s stock price has risen 608% this year alone, its best performing year since its initial listing on Wallstreet. The company saw a recent spike in volume trading, after the S&P Dow Jones Indices announced the inclusion of Tesla in the S&P 500. Tesla is to join the S&P 500 on Monday, 21st of December. With such positive stock growth for the year of 2020, investors are now questioning what to expect for 2021. This article will breakdown everything you need to know about the 2021 forecasts for the EV Goliath, Tesla.
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What are analysts forecasting for Tesla stock moving into 2021?
The forecasts and price targets from analysts at larger institutions provide investors deeper insight into the “smart money” sentiment. According to CNN data, across the board of 34 analysts the media 12 month price target at $424.50. The targets range significantly, with higher end targets suggesting prices as high as $800 and lows at $40 a share. With such a large differential between price targets, analysing recent targets from institutions will shed more light on Tesla’s 2021 forecast. The following key price targets from large institutions are listed below:
- 11/18/2020 Morgan Stanley – Analyst Adam Jonas at Morgan Stanley upgraded their 12 month price target from $360 to $540 a share. This suggests an upside potential of 10% from the current trading price. The upgrade shifted Tesla’s performance rating from equal to overweight. This was a strong influence on the recent growth in the stock price.
- 11/17/2020 Bank of America – Analyst John Murphy at BOA initiated coverage on Tesla with a price target of $500 a share. The initial target drove confidence in Tesla investors, with an upside potential of 2.4%.
- 11/3/2020 Goldman Sachs – initiated a neutral rating on the company led by analyst Mark Delaney. The firm recently noted the effect on the S&P 500 listing on the stock, bullish on the demand for Tesla within managed funds that track the index.
- 10/22/2020 Oppennheimer Holdings – analyst Colin Rusch upgraded the 12 month price target from $451 to $486 which suggests a -0.6% downside potential from the current trading price.
What this means for Tesla investors?
The general consensus across the board of analysts is neutral, with institutional price targets for this month suggesting an average buy/overweight rating. The S&P 500 listing will also play a role in further stock growth according to Goldman Sachs. The firm believes the stock could surge further after December 21, due to a higher demand from managed funds and institutions. However, its important to note over the past 6 months the average rating from analysts sits at a neutral hold. This does suggest institutions are practising caution with Tesla, especially considering the current external factors the company is facing. This risk should always be calculated within your own investment strategy.
Looking deeper into Tesla’s financial performance and forecasts
The third quarter earnings for 2020 showed positive signs for investors, with increased Cash Flow, Revenue growth and strong delivery performance. Revenue for Q3 grew by 29% YOY which was achieved through strong delivery numbers for this quarter. Tesla also reported a $5.9 Billion increase in cash and cash equivalents on the balance sheet for this quarter. The deliveries for Q3 were just under 140,00 units in total, outstretching its Chinese competitors NIO 10 fold.
According to Yahoo Finance data, analysts predict Tesla’s annual revenue to increase on average by 45% for 2021. The revenue forecasts range from an average annual revenue of $44.95 Billion, with higher quartile estimates predicting revenue as high as $53.67 Billion and lower end predicts at $35 Billion. The forecasts for revenue are strong, suggesting further growth as the EV investment wind continues into 2021.
Whats in Tesla’s pipeline for 2021
- Tesla plans to add at least one new service center every week in 2021. Tesla will continue to build charging stations to meet the increasing demand for the vehicles.
- Reports acknowledge Tesla plan to begin deliveries of Model Y vehicles made in Berlin in 2021.
- Production in Fremont to reach full capacity in early 2021 according to Tesla.
- The Semi Truck expected to begin deliveries in 2021 according to the Q3 statement.
Tesla’s stock outlook for 2021
I am obliged to remind our viewers that this article is not financial advice but rather investment commentary from extensive research.
In conclusion, the general outlook for Tesla looks promising. The soon to be Blue Chip stock once listed on the S&P 500 should see strong volumes after December 21 as discussed by analysts at Goldman Sachs. The revenue forecasts and strong deliveries distinguishes Tesla from its on shore competitors as well as its Chinese industry counter parts.
The imminent threats to Tesla’s share price includes its current valuation whereby speculators have already priced in the S&P 500 news. Not to mention the threats of COVID-19 on the manufacturing and deliveries of the vehicles. These risks should always be calculated into your evaluation. All in all Tesla has continued to defy the bears throughout 2020, and I have no doubt its innovation can continue to reward shareholders assuming external factors can be mitigated by management (opinion not advice).
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.