Tesla stock price forecast 2023, 2025, 2030: Headwinds and tailwinds
- Tesla share price has soared by ~80% year-to-date.
- Estimates are that Tesla’s earnings per share will soar to $10 in 2025.
- Tesla’s annual revenue is expected to jump to $346 billion in 2030.
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Tesla (NASDAQ: TSLA) stock price dropped by more than 2% in extended hours after the company published weaker-than-expected earnings. It dropped to $171.68, the lowest level since March 13. In all, it has dropped by more than 205 from the year-to-date high, meaning it has moved into a bear markett.
Please note that the original article was written in March. This is an update with thoughts on the first-quarter results.
Tesla news 2023
Tesla, the biggest automaker in the world by market cap, has made several important headlines this year. The most recent Tesla news is that the company published its quarterly results on Wednesday,. The company said that its total revenue jumped by more than 24% to over $23 billion. Its operating margin dropped to 11.4% because of the recent price cuts. Also, the company’s net income attributed to shareholders dropped by 22% to 42.9 billion. These results were worse than expected.
Second, Tesla has announced several important delivery numbers. In January, the firm said that it manufactured 440k cars in the first-quarter of 2023. Most of these cars were Model 3 followed by Model Y. Of those vehicles, it has delivered 422k cars.
The other important Tesla news was the company’s decision to boost its manufacturing capacity by launching a new facility in Mexico. Elon Musk believes that the new facility will go live in the next few months or in 2023. The decision to move to Mexico was part of the company’s strategy to diversify its manufacturing across multiple countries. By so doing, it will offset its risks if the US and Chinese relations implode.
Further, Tesla made headlines by cutting vehicle prices. Earlier this month, the company slashed the prices of its most expensive vehicles by between 4% and 9%. They were the fifth price cuts in the past few months. As such, there are concerns about the company’s demand.
Tesla share price vs other EV stocks
Tesla stock has outperformed other EV companies in 2023. It has jumped by more than 80% this year. The other EV stock in the green is Lucid, an American company. Lucid has done well because of the significant investments made by Saudi Arabia, the biggest shareholder.
Other EV and Traditional stocks like Nio, XPeng, Ford, General Motors, and Rivian have all struggled this year. This decline is because of the rising competition in China and the United States, falling demand, and lower profitability.
In terms of profitability, Rivian surprised investors when it unveiled that it lost over $6.4 billion in cash burn in 2023. The company, like most EV startups, is losing money for every car that it sells. Cash burn is popular among these companies, including Mullen Automotive, which I wrote about hhttps://invezz.com/news/2023/03/15/muln-stock-price-could-crash-to-zero-as-bankruptcy-risks-rise/ere.
What is the future of Tesla?
A common question among investors and analysts is on the future of Tesla. The company has done well in the past few years in a difficult environment. However, I believe that Tesla faces a difficult future ahead as it battles numerous challenges.
First, competition in the EV industry is a major issue. In the US, it is competing with well-known brands like Ford and GM and startups like Rivian, Lucid Motors, and Faraday Future among others. Therefore, the company has started losing market share in key segments.
The same is true in China, where competition is much bigger. Homegrown companies like Byd, Nio, Li Auto, and Xpeng are aggressively gaining market share. A key challenge in China is that the economy is not doing well even after Beijing ended the Covid-zero strategy.
Another big challenge is whether EVs are the future of transportation after all. While EV growth has been exciting, it has important challenges like batteries and range anxiety. On average, it takes more than 30 minutes to charge an EV compared to less than 5 minutes to fill gas.
Also, in most cases, the battery technology is still behind, with the advertised range being lower than the actual one. And when the battery dies, the overall cost of replacing it is over $13,000. In contrast, the average used car costs about $29,000.
Another challenge is the power grid in key countries like the US and China. In 2022, China went through many power outages because of drought and coal shortage.
Most importantly, some studies have shown that people who buy EVs tend to move to gasoline cars. As such, Tesla and other EV companies could struggle in the future.
Tesla stock analyst ratings
Analysts have a mixed opinions of where the Tesla stock price will move to in 2023. Recently, analysts at Wolfe Research, Berenberg, and KGI Securities decided to downgrade the stock, citing some of the challenges I mentioned above.
On the other hand, those at Jefferies, Wells Fargo, and Royal Bank of Canada upgraded the company. They noted that Tesla has a strong market share and that it is on track to more than double their vehicle production in the coming years.
Personally, I believe that the company faces a tough period ahead, which explains why it is slashing prices. In economics 101, companies don’t slash prices when there is elevated demand. The chart below shows that the average Tesla stock price forecast by analysts stands at $221, which is 12% above the current level.
Tesla stock price prediction 2023
On the daily chart, we see that the Tesla stock price is in danger. It has formed what looks like a double-top pattern at $209 whose neckline is at $162. This pattern is one of the most accurate bearish signs. The upper side of the pattern is along the 50% Fibonacci Retracement level. It has also moved below the 25-day moving average.
Therefore, at this stage, I suspect that Tesla share price will continue falling in the coming days as sellers target the 23.6% Fibonacci Retracement level, which is about 12% below the current level. A drop below that point will bring the year-to-date low of $103 to view. At this stage, bulls must move above the double-top point at $209.81 to confirm more upside.
Tesla stock price forecast 2025-2030
As the past few years have proved, it is relatively difficult to provide a clear estimate of how the Tesla stock price will trade in the coming months, let alone years. Therefore, by using revenue and earnings estimates, we can come up with a clear picture of where the stock will be in 2025 and 2030.
Data shows that Tesla has seen its annual EPS grow from $0.24 in 2020 to $3.6 in 2022. According to SeekingAlpha, this EPS is expected to grow to $6.89 in 2025, with the year-on-year growth estimated to be 24%. In 2030, the EPS is expected to be $10.57.
Meanwhile, estimates show that Tesla’s revenues will continue soaring in the next decade. The median estimate is that its revenue will reach $164 billion and $346 billion in 2025 and 2030, respectively. Analysts believe that Tesla’s revenue will hit $561 billion in 2032.
Therefore, using these metrics, we can estimate that the Tesla stock price will grow by at least three times by 2030. This means that it will be trading above $600 by then. In a recent statement, billionaire Ron Baron said that he expects Tesla share price to jump to $1,500 by 2030.
However, these estimates should be taken with a grain of salt. A good example of this is Cisco, which was valued at over $500 billion during the dot com bubble. Its stock crashed and the company is now valued at ~$207 billion. Tesla could move in that same direction. Tesla’s future will depend on how its technology evolves over the years and the nature of competition in the industry.
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