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Under CEO Elon Musk's relentless ambition, Tesla (TSLA) has grown from a niche electric vehicle (EV) maker to a global symbol of innovation in clean energy and autonomous driving. Its journey has been nothing short of remarkable, marked by milestones that have silenced skeptics and defined its dominance.
As 2024 approaches its close, Tesla finds itself at a crossroads. TSLA stock has surged 47% since the U.S. presidential election on Nov. 5. Stifel’s 43.2% price hike and a rare upgrade from Roth MKM to “Buy,” citing Musk’s alignment with President-elect Donald Trump, have supported shares. Analysts argue that this political shift could widen Tesla’s appeal and leverage regulatory tailwinds.
However, this optimism faces headwinds in China, where Tesla’s shipments have faltered amid fierce competition. With double-digit gains already banked this year, can Tesla sustain this upward march, or will challenges abroad clip its wings?
About Tesla Stock
Texas-headquartered Tesla, with a staggering $1.2 trillion market capitalization, has redefined industries with its EVs, solar solutions, energy storage, and ventures into artificial intelligence (AI) and robotics.
Tesla’s meteoric corporate rise is mirrored by its market performance. Since its 2010 IPO, the stock has delivered an impressive 2,392% return.
TSLA rallied 111.1% over the past six months, surging 47% over just the past month and hitting a 52-week high of 386.30, fueled by optimism about its prospects under a Trump administration, which may favor regulatory easing. This rally added over $14 billion to Elon Musk's fortune, reaffirming investor confidence in Tesla’s dominance and visionary leadership.
From a valuation standpoint, TSLA is trading at a lofty 176.20 times forward earnings, substantially higher than the sector median of 18x and its own five-year historical average of 114x. Such lofty multiples signal a market brimming with optimism but leave the stock vulnerable to overvaluation concerns.
Tesla Surges After Q3 Earnings
Following a third-quarter earnings report in late October, the stock surged 21.9% - its best single-day gain in a decade. Revenues climbed to $25.2 billion, an 8% year-over-year increase, driven by its Automotive and Energy Generation segments, alongside $326 million in deferred Full Self-Driving (FSD) system sales.
Despite missing revenue expectations, Tesla broke its streak of earnings misses, posting an adjusted EPS of $0.72, exceeding Wall Street’s estimate. Plus, its production rebounded sharply, with 469,796 EVs built, a 9% increase, while deliveries rose 6%. Efficiency gains saw operating margins improve to 10.8%, and free cash flow tripled to $2.7 billion, bolstering its cash reserves to $33.6 billion against just $2.3 billion in short-term debt.
Elon Musk, undeterred, made ambitious projections during the Q3 earnings call, including volume production of its Cybercab robotaxis by 2026 and imminent driverless ride-hailing in Texas and California. However, his track record of missed timelines may temper investor enthusiasm.
Tesla finds itself navigating turbulent waters, particularly in China, where the competitive EV market is dominated by local heavyweights like BYD (BYDDY), Nio (NIO), and Li Auto (LI). Data from the China Passenger Car Association (CPCA) reveals that Tesla’s China-made EV sales dipped 4.3% year-over-year in November to 78,856 units. Meanwhile, BYD continues to soar, setting another monthly record with a 67.2% year-over-year surge, selling 504,003 passenger vehicles in November alone.
Tesla has introduced a year-end incentive - a 10,000 yuan ($1,376) discount on outstanding loans for its popular Model Y - to counter BYD’s aggressive cost-cutting measures.
Despite these efforts, Tesla hinted at lower Q4 deliveries compared to last year, even with the much-anticipated Cybertruck launch. Analysts tracking Tesla predict fiscal Q4 EPS to surge 14% year over year to $0.65. For fiscal 2024, EPS is estimated to be around $1.99, with the bottom line estimated to surge 44.2% annually to $2.87 per share in 2025.
Tesla’s ability to maintain its financial resilience while navigating this fiercely competitive EV landscape will test its leadership as it balances innovation, market share, and execution under increasing pressure.
What Do Analysts Expect for Tesla Stock?
Tesla's stock has been on a remarkable ride, surging nearly 47% since early November, as analysts debate its valuation and prospects. Stifel’s Stephen Gengaro raised the target price of TSLA to $411 from $285 – also the Street high - implying upside potential of 5.6%.
The analyst calls it a “crazy month,” crediting optimism around Elon Musk’s connections with the new administration. Gengaro sees a “clearer path” for Tesla’s autonomous and self-driving ambitions but warns that Tesla’s market cap is exorbitant if viewed purely as an automaker. Still, he acknowledges that Tesla’s unique blend of technology and innovation defies conventional categorization.
Meanwhile, Roth MKM upgraded Tesla to “Buy” from “Neutral,” citing Elon Musk's connection to the Trump transition team as a potential boost for the EV giant. The brokerage raised Tesla's price target to $380 and noted that the elimination of Biden's $7,500 EV tax credit could indirectly benefit Tesla as traditional automakers retreat from the EV market.
Roth MKM highlighted Tesla’s growing appeal among conservative voters, which could enhance demand and bolster the company’s delivery growth targets between 20% and 30% by 2025. Additionally, the firm sees Tesla's robotics program as a key near-term value driver, supported by positive catalysts that strengthen its long-term valuation outlook.
On the contrary, UBS analyst Joseph Spak maintains a “Sell” on Tesla, citing overvaluation despite raising the price target, attributing its rise to momentum-driven “animal spirits” rather than fundamentals.
TSLA stock has a consensus “Hold” rating overall. Among the 38 analysts in coverage, 11 suggest a “Strong Buy,” two advise a “Moderate Buy,” 16 recommend a “Hold,” and the remaining nine analysts advocate for a “Strong Sell.” The mean price target of $241.56 implies about 37% downside from the Dec. 6 closing price.
