Tesla (NASDAQ:TSLA) has seen a strong rally following its third-quarter results, recording one of its sharpest single-day gains in over a decade. Currently trading around $257.55, Tesla stock is within 6% of its 52-week high, posting a 30.4% gain in the past year and 3.5% growth in 2024. Despite this momentum, Tesla’s valuation is still 37.8% below its all-time peak. With a market cap of $826 billion, Tesla remains the largest automobile manufacturer by market value. But as analysts weigh in on its future, the mixed forecast highlights potential volatility for Tesla stock.

Target Price Forecasts for Tesla Stock

Investment bank Barclays recently adjusted Tesla’s price target to $235 from $220 while maintaining an “equal weight” rating. Barclays credits Tesla’s expanding gross margins and optimistic delivery projections for 2025, seeing them as positive signs for growth. Tesla’s gross margin reached 19.8% in Q3 of 2024, up from 17.9% a year ago, with vehicle deliveries expected to grow between 20% and 25% next year, ahead of initial estimates.

However, the updated price target from Barclays is still nearly 9% below Tesla’s current trading level, reflecting tempered optimism. On the other hand, Piper Sandler, another major analyst firm, maintained a “buy” rating on Tesla, raising its target price to $315 from $310, citing confidence in Tesla’s margins and increased deliveries.

Among the 38 analysts tracking Tesla stock, there’s a variety of opinions: 10 suggest a “strong buy,” two indicate a “moderate buy,” 17 recommend “hold,” one suggests a “moderate sell,” and eight recommend a “strong sell.” The average price target for Tesla stock stands at $215.65, which is over 16% below its current price. This range of views emphasizes the complexity of predicting Tesla’s stock trajectory.

Evaluating Tesla’s Latest Earnings and Future Plans

Tesla’s Q3 earnings exceeded market expectations, with revenue hitting $25.37 billion and adjusted earnings per share of $0.72. This was above Wall Street’s forecast of $0.58, marking a robust quarter for Tesla. Environmental regulatory credits, which contributed $739 million to Tesla’s earnings, and $326 million in revenue from the Full Self-Driving (FSD) system also boosted the company’s bottom line.

Looking forward, CEO Elon Musk outlined ambitious plans in the recent earnings call, including production of the Cybercab, a robotaxi model, by the end of 2026. Musk also mentioned future autonomous ride-hailing services in states like Texas and California. However, Musk’s timelines have historically been ambitious, and he has faced delays with previous promises, including a fully autonomous vehicle.

While the potential for autonomous vehicle revenue is exciting, Tesla faces regulatory and technological challenges in bringing the robotaxi to market. It will also compete with major players in autonomous driving, such as Alphabet’s Waymo (NASDAQ:GOOGL), Uber (NYSE:UBER), and General Motors (NYSE:GM), which are heavily investing in similar technologies.

Is Tesla Stock a Good Buy Right Now?

Tesla stock price has been highly responsive to earnings announcements, making it a volatile option for investors. Analysts expect Tesla’s adjusted earnings to rise from $2.47 per share in 2024 to $3.26 per share in 2025. This growth expectation has encouraged optimism among some investors, but Tesla’s valuation remains high, trading at 79x forward earnings.

Tesla’s focus on operational efficiency has led to a significant increase in free cash flow, which rose from $849 million in Q3 of 2023 to $2.74 billion in the latest quarter. With an annualized free cash flow of approximately $11 billion, Tesla continues to navigate the current economic environment, albeit with a premium valuation.

Final Thoughts on Tesla’s Stock Forecast

Tesla stock forecast for 2024 and beyond presents a mixed picture. While Tesla’s robust performance and forward-looking projects keep investor interest high, its elevated price-to-earnings ratio and ongoing need for operational excellence make it a stock requiring careful consideration.

The range of analyst price targets reflects different perspectives on Tesla’s valuation and growth potential. As Tesla seeks to expand its revenue streams with autonomous driving and cost-efficient operations, the coming years will be crucial in determining whether the company can meet the high expectations tied to its name.

Investors should weigh Tesla’s ambitious projects against potential risks, keeping in mind the fluctuating outlook and the possibility of unexpected developments in autonomous technology and regulatory approval.

Featured Image:  Pexels © Makara Heng

Please See Disclaimer