He Tesla The stock price of (NASDAQ:TSLA) has been on a wild ride lately, hasn’t it? As I look into my crystal ball for 2024, there’s a lot to analyze for potential investors in this EV powerhouse. Let’s take a closer look.
Another wild year
The average analyst estimates that Tesla's share price will reach $211.46 over the next 12 months. However, there is a wide range of opinions. The most pessimistic have predicted $85 and the most optimistic $310. It is worth noting that at around $211.75, the current share price is in line with the average forecast. Has the market got it right yet?
Looking ahead to the end of 2024, I think there is a good chance the stock will rise. With production ramping up in new factories globally, those all-important profit margins should increase.
CEO Elon Musk's focus on ai and robotics has enormous potential to redefine the company's future. He frequently urges investors to consider the company not just as an automotive company, but as an ai and robotics company.
Management hopes to have robotaxis on the road next year and also plans to produce several thousand of its new robots for internal use.
However, while these innovations are promising, the timeline for them to pay off remains uncertain. Management has a history of missing deadlines, such as the delayed launch of the Cybertruck. This serves as a reminder that investors should always temper expectations.
In the EV sector, competition is clearly heating up, with traditional automakers and brave new companies entering in force. And we can’t ignore the broader economic picture: if inflation and interest rates remain uncertain, people might think twice about splurging.
We are already seeing the results of this uncertainty. In the first quarter of 2024, deliveries fell 8.5% year-over-year (the first such decline since 2020), followed by a 5% contraction in the second quarter. Management warned that vehicle volume growth for 2024 will likely be lower than in 2023, citing efforts to launch its next-generation vehicle, macroeconomic uncertainties, and slowing demand for electric vehicles.
I'll also be keeping an eye on Musk's controversial views as the US general election approaches. Many fear his divisive views will negatively impact business, as they have driven the stock down on occasions in the past.
My best guess
All things considered, I think the stock could end 2024 somewhere between $250 and $300. That would represent a sizable gain of between 20% and 40% from current levels.
Of course, this is just my best guess. The company is clearly a bit of a maverick, and its stock price is known for swinging around when everyone expects it to. The lofty valuation (with a price-to-earnings (P/E) ratio of 51.9 times and a price-to-sales (P/S) ratio of 6.7 times) means it will need to continue to meet expectations to justify its premium price.
A bumpy road
So for those tempted by Tesla, I suggest you be prepared for a bumpy ride. The company has proven it can deliver impressive innovations, but the market can sometimes look past that. The controversy and hype may make many current or potential investors nervous, but I'll hold onto my stock for the long haul.
