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Tesla stock forecast and price prediction

Tesla stock forecast and price prediction


Key points

  • Tesla is the U.S. market leader in electric vehicle sales.
  • Tesla’s stock has been an extremely strong performer in the past decade. 
  • CEO Elon Musk has built a large cultlike following, but he also creates risks for investors.

Tesla and its high-profile CEO Elon Musk have been two of the most controversial topics on Wall Street in the past decade, but there’s no question Tesla has been a spectacular long-term investment up to this point.

Tesla’s stock hasn’t set a new all-time high since November 2021. However, Tesla has seemingly regained its positive momentum in 2023 following a 65% drop in 2022, its worst year ever as a public company.

The past several years have been a bumpy ride for Tesla investors as the company has dealt with missed delivery targets, dilutive capital raises, insider selling, surging electric vehicle market competition and several legal hurdles for Musk, including a securities fraud settlement with the Securities and Exchange Commission. 

The key to Tesla’s success moving forward may hinge on the company’s ability to maintain its first-mover advantage in the U.S. EV market, continue its impressive growth trajectory and expand outside of its core auto business.

Tesla at a glance

Tesla was founded in 2003 by engineers Martin Eberhard and Marc Tarpenning, and Musk joined the company as chairman when he invested $30 million in Tesla in 2004. Musk took over as CEO in 2008, the same year Tesla began production of its first model, the Roadster.

Tesla went public in 2010, and it began full production of its first mainstream consumer EV, the Model S, in 2012. Tesla also began building charge stations called Superchargers in 2012 and released its Model X crossover vehicle three years later in 2015. In 2016, the company opened the first of a series of Gigafactories, large production facilities intended to help Tesla aggressively scale its production. Tesla also acquired solar panel company SolarCity in 2016 as part of its plans to expand its clean energy business. 

In 2017, Tesla began production of its Model 3, a four-door sedan intended to be an affordable EV for the mass market. The Model 3 even surpassed the Nissan Leaf in some markets as the best-selling EV.

After Musk infamously tweeted he had “funding secured” to take Tesla private, the SEC charged Musk with securities fraud in September 2018. Musk and Tesla were each fined $20 million as part of a fraud settlement shortly thereafter.

Tesla reported its first profitable year in 2020 and became the largest company ever added to the S&P 500 in December 2020.

Tesla stock price

Tesla went public at an initial public offering price of $17 in 2010, but it has since split its stock twice. Tesla completed a five-for-one split in 2020 and a three-for-one split in 2022. Therefore, a single share of Tesla’s IPO stock would represent 15 shares of today’s TSLA stock.

Tesla gained 743% in 2020 after the company finally met the profitability requirement for inclusion in the S&P 500. Tesla was by far the best-performing stock in the S&P 500 in 2020, more than doubling the return of any other stock in the index. An EV-buying frenzy on Wall Street sent Tesla’s market capitalization soaring from less than $90 billion at the beginning of 2020 to more than $650 billion by year’s end, despite Tesla reporting just 28.3% revenue growth that year.

Tesla ultimately made it to its split-adjusted all-time high of $414.50 in November 2021 before the stock dropped 65% in 2022 during a broad sell-off in tech stocks.

How has Tesla stock performed?

Tesla’s stock performance varies depending on the time frame you consider. Over the past 10 years, TSLA has generated a total return of more than 2,000%. However, if you look year to date, Tesla shares are up 125% compared to a 12% total return for the S&P 500.

Opportunities and obstacles facing Tesla

Tesla is well positioned to continue to outperform moving forward, but it also faces several potential stumbling blocks ahead.

Analysts expect EV adoption will continue to rise over the next decade, creating a significant growth tailwind for industry leader Tesla. In addition, Tesla has announced several new products in its pipeline, including the highly anticipated Cybertruck, a relaunch of the discontinued Roadster and the Optimus robot. 

However, Tesla’s market share is expected to decline as competitors bring more EV models to market. Tesla has also repeatedly failed to deliver on Musk’s promises of a Level 5 autonomous vehicle system, and research firm Guidehouse Insights even recently ranked Tesla’s Full Self-Driving Level 2 system at the bottom of 16 companies ranked for developing AV technology. 

Strengths

  • First-mover advantage in the U.S. EV market.
  • Musk has built a loyal, cultlike following that will support Tesla’s stock price and products. 
  • Tesla has consistently reported better revenue growth than legacy automakers.

Weaknesses

  • AV technology has not met expectations and has underperformed competitors.
  • A forward price-to-earnings ratio of 58.5 suggests a tremendous amount of future profitability is already priced into the stock.
  • Musk’s commitments to his other companies, including X (formerly Twitter), SpaceX and Neuralink.

Related: Best online brokers.

What can we expect from Tesla in 2023?

Analysts are generally optimistic about Tesla’s business but see limited upside for its stock price in 2023. The analysts covering Tesla are projecting full-year adjusted earnings per share of $3.32 this year, down from an EPS of $4.07 in 2022. In addition, Tesla analysts are calling for 21.4% revenue growth in 2023 and 23.2% growth in 2024.

Bank of America analyst John Murphy said growing EV demand creates a growth path for Tesla.

“TSLA’s self-funding status and ongoing access to relatively low-cost capital should also help support future growth,” Murphy said. “The company is facing a number of hurdles, including the broader macroenvironment, risks to EV demand, growing competition and management distractions that could persist over the near term.”

Bank of America has a “neutral” rating and $300 price target for Tesla.

CFRA analyst Garrett Nelson said the Biden administration’s Inflation Reduction Act has been a tailwind for Tesla sales in 2023.

“We peg TSLA as the biggest winner (of) the Inflation Reduction Act (signed into law in August 2022),” Nelson said. That’s because most versions of the industry’s two best selling EVs, Tesla’s models Y and 3, became eligible for the $7,500 federal EV tax credit effective Jan. 1, 2023.

CFRA has a “buy” rating and $325 price target for Tesla.

The 35 analysts covering TSLA stock have a median price target of $266, suggesting single-digit upside over the next 12 months. However, investors should always conduct their own research before making important investment decisions.

What can we expect in the coming years?

Tesla’s biggest wild card in the next several years will likely come from outside the company. Ford (F), General Motors (GM) and other legacy automakers plan to roll out several new EV models in 2024 and beyond. Meanwhile, Rivian (RIVN), Lucid (LCID) and other EV startup companies will also be ramping up their production aggressively. How well Tesla fends off this next wave of competition will likely go a long way in determining whether its stock continues to outperform.

Nelson projects Tesla’s revenue growth will ramp up from 24% in 2023 to more than 30% in 2024.

“The primary driver of the increase is higher volumes from the ramp-up of its new factories in Texas and Germany,” he said.

Morningstar analyst Seth Goldstein said Tesla is well-positioned to capture growth in the solar energy and battery storage markets. It’s also attempting to capture more of its customers’ auto-related spending by selling services such as insurance and autonomous driving software. 

“Tesla aims to maintain its market leader status as EVs grow from a niche market to reaching mass consumer adoption. We forecast EVs will reach 40% of global auto sales by 2030,” Goldstein said. 

Frequently asked questions (FAQs)

The median 12-month price target among the Wall Street analysts covering TSLA stock is $266, suggesting a small upside. That said, it’s tough to predict stock movement over the long term, and Tesla’s ability to reach that consensus target and continue higher in 2025 will largely depend on whether the company can meet or exceed market expectations for vehicle deliveries, revenue growth and profitability.

No, Tesla has never paid dividends to investors. Instead of returning capital to shareholders, Tesla reinvests its earnings in future growth initiatives.

Analysts see very limited additional upside for Tesla in the next 12 months based on their median price target of $266. The highest analyst price target for Tesla is $400, while the lowest analyst price target is $85.



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