Tesla stock (NASDAQ: TSLA) has continued its stellar run over the past year as the tech innovator continues to dominate the growing EV industry. Tesla’s stock price has risen 255% over the past 12 months, the stocks best performing trading period since its initial listing on Wallstreet. However, the company is trading 21% lower this month with investors now questioning if now is the time to capitalise on the downtrend. This article will breakdown everything investors need to know about the 2021/22 forecasts for the EV Goliath, Tesla.
Table of contents
- What are analysts forecasting for Tesla stock moving into 2021/22?
- Ark Invest sets $3,000 price target for Tesla stock by 2025
- Looking deeper into Tesla’s financial performance and forecasts
- Revenue forecasts for Tesla in 2021/22
- Whats in Tesla’s pipeline for 2021
What are analysts forecasting for Tesla stock moving into 2021/22?
Firstly, the price targets from analysts at larger institutions can provide investors deeper insight into the current “smart money” consensus. According to CNN data, across the board of 32 analysts the median 12 month price target is $768.00. The price targets range significantly, with higher end targets suggesting targets as high as $1,471 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 12 month outlook. The following key price targets from large institutions are listed below:
- Goldman Sachs 4/27/2021– Analyst Sharmini Chetwode boosted the banks Buy rating on Tesla stock with a price target of $860. The analyst noted the company is positioned well to capitalise on the EV trend as a leader in the industry.
- Morgan Stanley 4/26/2021 – Analyst Adam Jonas increased the 12 month price target to $900, an upside of 57% from the current trading price. The analyst has an overweight rating on the stock suggesting a positive outlook on the companies midterm performance.
- Mizuho 4/26/2021 – analyst Vijay Rakesh boosted the firms 12 month price target to $820 a share. The target represents an upside of 43.85% from the current trading price.
- Wedbush 4/9/2021 – analyst Daniel Ives boosted the firms 12 month price target to $1,000 a share. This illustrates an upside potential of 75.40% from the current trading price. Ives boosted the 12 month price target after delivery numbers for Q1 were released. The analyst noted the company could exceed 850,000 vehicles deliveries for the year based on current demand.
Ark Invest sets $3,000 price target for Tesla stock by 2025
On March 19, analyst Tasha Keeney at Ark Invest released the firms updated price target on Tesla stock. Ark have set a $3,000 price target for 2025 which analyses both Bullish and Bearish scenarios. Ark noted a Bullish target at $4,000 a share and a bearish target of $1,500 (both targets for 2025). In the Bull case thesis, Tesla will sell 10 million vehicles in 2025 whilst its bear case suggests 5 million vehicles sold.
ARK had also priced in the potential of Tesla’s insurance business over the next 5 years. With Tesla vehicles collecting real-time data, the company can underwrite the insurance risk of their vehicles. ARK forecasts the company will turn over $23 Billion in revenue annually from its insurance products alone by 2025 (Bear Case Scenario). Overall, ARK is known as a long standing Bull of Tesla stock and their $3,000 price target for 2025 solidifies the firms confidence in TSLA.
What this means for Tesla investors?
The general consensus across the board of analysts is slightly bullish, with institutional price targets for this month suggesting an average Buy rating (April 2021 Targets). However, it’s 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 stock. Especially considering the current external factors influencing production including the semi-conductor crisis and US-China trade tensions.
Looking deeper into Tesla’s financial performance and forecasts
Firstly, the Q1 earnings for 2021 exceeded analyst expectations. The EPS was $0.93 per share whilst the expected EPS was $0.79 per share (17% surprise compared to analysts forecasts) . It’s worth noting the positive results were assisted by the sale of $518 million in Regulatory Credits alongside the sale of a portion of Tesla’s Bitcoin reserves ($101 Million positive impact from sale). Revenue for Q1 grew by 74% YOY (compared to Q4 2019) which was achieved through strong delivery numbers for this quarter. The deliveries for Q1 were 184,877 units in total, outstretching its Chinese competitor NIO 10+ fold.
Revenue forecasts for Tesla in 2021/22
Analysts predict Tesla’s annual revenue to increase on average by 56% for 2021. The revenue forecasts expects Tesla to generate on average $49.25 Billion in 2021 (as of 14/05/2021). In addition, the average revenue forecast for 2022 is $65.78 Billion. The revenue forecasts suggest strong financial performance for Tesla as the EV market continues to grow in 2021/22. Looking forward, ARK’s model as discussed above predicts Tesla to generate $507 Billion by 2025. This translates an EBITDA of $176 Billion for the same year. See ARK’s full revenue model here.
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.
- At this stage, Tesla will not accept Bitcoin as a form of payment for a Tesla vehicles due to environmental concerns. Elon Musk has stated on Twitter that the company may be looking into more energy efficient crypto-currencies in the future.
- The company expects to grow deliveries by 50% or more over the next few years. In addition, Tesla will 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.
In conclusion, Tesla continues to divide the bulls and the bears with its future outlook in 2021 and beyond. The bullish sentiment from analysts over the past month is a positive sign for long term shareholders. In addition, the positive revenue forecasts and continued delivery growth from Tesla is not to be undervalued. However, investors should tread with caution as the EV industry has seen a fair amount of market volatility as of late. The semi-conductor crisis will also play an influential role in Tesla’s mid to long term future.
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.
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