Why not to buy Tesla stock?
Tesla Stock Declines In 2024
The downgrade comes as the overall EV market has cooled and competition has intensified, developments that have led Tesla to announce a series of price cuts to boost demand. Those price cuts are having little effect on Tesla's sales and are pushing down profits, Wells Fargo analysts led by Colin Langan said in a note.
Tesla stock isn't a great value right now
Tesla's ability to hold its own in the face of mounting competition is the true test over the next few years. The biggest problem with Tesla isn't its slowdown but its valuation. Analyst consensus estimates for 2024 earnings are $3.05 per share and $4.16 per share in 2025.
As new lower-priced EVs enter the market, Tesla may be forced to continue to cut prices, reducing the firm's industry-leading profits. With more EV choices, consumers may view Tesla less favourably. The firm is investing heavily in capacity expansions that carry the risk of delays and cost overruns.
Performance for Tesla has just not been good. You look at that last earnings report, earnings have been softer than expected for six straight quarters. So the Street is getting concerned about the company's performance. Number two, Wall Street profit estimates on Tesla are actually starting to fall.
Langan predicts that Tesla's growth will remain flat this year and then decline in 2025 as competition increases, deliveries disappoint and the beleaguered auto and tech company is forced to cut prices again. UBS also downgraded its forecast for Tesla on Wednesday.
Based on 35 Wall Street analysts offering 12 month price targets for Tesla in the last 3 months. The average price target is $205.22 with a high forecast of $320.00 and a low forecast of $23.53. The average price target represents a 26.29% change from the last price of $162.50.
The average analyst price target for Tesla stock is about $210 a share. A downgrade to Sell from Hold doesn't change the Buy-rating ratio. Overall, 18% of analysts covering Tesla stock rate shares Sell. The average Sell-rating ratio for stocks in the S&P 500 is about 7%.
As of 2024-03-16, the Fair Value of Tesla Inc (TSLA) is 107.6 USD. This value is based on the Peter Lynch's Fair Value formula. With the current market price of 163.57 USD, the upside of Tesla Inc is -34.2%.
Will Tesla stock go up 2024?
With 2023 in the rearview mirror, analyst consensus now has 2024 Tesla earnings below 2023's level, signaling another year of negative growth for this growth stock. Wall Street expects Tesla earnings per share of just $3.03 a share in 2024, according to FactSet.
- Nvidia. Tech stocks have surged over the last year thanks to a boom in AI. ...
- Amazon. Amazon (NASDAQ: AMZN) is a tech behemoth with a market cap of $1.8 billion, making it the world's fifth most valuable company.
Plus, Tesla does not pay a dividend to shareholders. As a result, we believe income investors looking for lower volatility should consider high-quality dividend growth stocks. The Dividend Aristocrats are a group of 68 stocks in the S&P 500 Index with 25+ consecutive years of dividend growth.
“While an EV and battery technology leader, Tesla screens poorly relative to Mag 7 peers,” Wells Fargo's Langan said, noting the valuation discrepancy. The analyst lowered his 2024 profit estimate for the company to $2 a share from $2.40.
Bullish Tesla investors also point out that the company's revenue growth beyond 2024 is expected to surpass all of the Magnificent Seven other than Nvidia Corp. Its earnings are also projected to bounce back in 2025 after dropping this year, and will be climbing at a faster pace than most other mega-caps.
| Year | Prediction | Change |
|---|---|---|
| 2025 | $ 209.27 | 27.81% |
| 2026 | $ 267.47 | 63.35% |
| 2027 | $ 341.84 | 108.77% |
| 2028 | $ 436.90 | 166.83% |
Tesla's short-term outlook might be challenging, but its long-term growth story remains intact. Yet buying the stock at current valuations might expose investors to unnecessary risks, especially in this volatile macro environment. New investors should avoid buying the stock today.
Wall Street expects Tesla earnings per share of just $3.02 a share in 2024, according to FactSet. That would be more than a 2% decline vs. last year's $3.12. That was a 23% decline vs. 2022. Analyst project a solid increase in 2025 to $4.13 a share.
| Ticker | Company | Performance (Year) |
|---|---|---|
| NVDA | NVIDIA Corp | 287.22% |
| SOUN | SoundHound AI Inc | 267.76% |
| SYM | Symbotic Inc | 177.62% |
| AVAV | AeroVironment Inc. | 79.01% |
The S&P 500 index had an average annual return of 11.8% between 1957 and 2021. If Tesla stock were to grow at this average rate until 2040, TSLA stock would be worth $1,541 in 2040. This would be more than 4x the stock's current all-time high price of $407.
Is Apple a buy or sell?
Apple's analyst rating consensus is a Moderate Buy. This is based on the ratings of 26 Wall Streets Analysts. How can I buy shares of AAPL?
Amazon currently has an average brokerage recommendation (ABR) of 1.11, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 46 brokerage firms. An ABR of 1.11 approximates between Strong Buy and Buy.
Meanwhile, Tesla enthusiast Dan Ives of Wedbush Securities considers investors' bearishness to be overdone, suggesting that the EV-maker's stock could bounce back 77% in 12 months. To achieve this, Ives emphasized that Musk's compensation package should be improved, while his control of shares should be raised.
The Tesla Model 3 has the best value retention at a five-year depreciation rate of 42.9%. That outpaces the average for the segment by 6.2 percentage points, but still lags the industry average of 38.8%.
Of the 40 recommendations that derive the current ABR, 35 are Strong Buy and two are Buy. Strong Buy and Buy respectively account for 87.5% and 5% of all recommendations. The ABR suggests buying Nvidia, but making an investment decision solely on the basis of this information might not be a good idea.
