Tesla stock (NASDAQ: TSLA) has continued its stellar run this year as the tech innovator continues to dominate the growing EV industry. Tesla’s stock price has risen 344% in the past year, its best performing trading period since its initial listing on Wallstreet. With such positive stock growth over the past year, investors are now questioning what to expect for 2021/22. Recently, Tesla has entered the spotlight after analysts predict the company had made an estimated $1 Billion on its controversial Bitcoin bet. However, the Q4 earnings saw a bearish shift in analyst sentiment. 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 30 analysts the median 12 month price target at $687.50. The targets range significantly, with higher end targets suggesting prices as high as $1200 and lows at $67 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:
- 2/2/2021 Credit Suisse – Analysts at Credit Suisse downgraded their rating on TSLA from Neutral to a Sell.
- 1/28/2021 JP Morgan & Chase – Analysts boosted the price target from $125 to a short $135 a share. This suggests a downside of 82% from the current trading price. The company also has a Underweight rating on the stock.
- 11/3/2020 Goldman Sachs – initiated a neutral rating on the company led by analyst Mark Delaney. The firm 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 36% downside potential from the current trading price.
What this means for Tesla investors?
The general consensus across the board of analysts is conservative, with institutional price targets for this month suggesting an average sell/hold rating. In addition, its important to note over the past 6 months the average rating from analysts sat at a neutral/hold. This does suggest institutions are practising caution with Tesla, especially considering the current external factors the company is facing. It is clear majority of smart money analysts are conservative of the current trading price of Tesla. However, this is not a new prospect as the average price target from analysts over the past 6 months has consistently suggested a downside.
Looking deeper into Tesla’s financial performance and forecasts
The fourth quarter earnings for 2020 missed expectations of analysts. The EPS for Q4 2020 was 0.24 whilst the expectations were at 0.63 (-61% surprise compared to analysts forecasts) . It is worth noting the Average Selling Price was also down 11% for the quarter YOY which had effected the bottom line. However, revenue for Q3 grew by 45% YOY (compared to Q4 2019) which was achieved through strong delivery numbers for this quarter. Tesla also reported a $4.8 Billion increase in cash and cash equivalents on the balance sheet for this quarter compared to last quarter (Q3 2020). The deliveries for Q4 were just under 180,570 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 $48.15 Billion, with higher quartile estimates predicting revenue as high as $56.47 Billion and lower end predicts at $35 Billion. In addition, the average 2022 revenue forecast is estimated at $61.93 Billion. The forecasts for revenue are strong, suggesting further growth as the EV investment wind continues into 2021/22.
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.
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.
Written by Tyger Fitzpatrick, Founder of Youth Investment Group – For full disclosure to our viewers, the author of this article has a long term position in the stock.