Many describe Tesla Inc. as a high-risk, high-reward investment. Undoubtedly, this progressive high-tech manufacturer remains one of the world's most interesting public companies.
The California-based business specialises in the development, design, manufacture and sale of energy generation and storage systems, as well as the world-renowned fully electric vehicles. Additionally, the company offers self-driving capability, supercharger stations and vehicle service centres.
Today, Tesla can be truly called one of the most controversial companies on the market. Some people point out that the business has been posting larger-than-expected losses for quite some time now, believing that its stock is madly overvalued according to traditional valuation metrics.
Others point out that the electric-vehicle leader is about to skyrocket and show massive revenue and profit growth, as the world gradually shifts away from using fossil fuels, understanding the importance of the concept of sustainability.
While both points of view have their merits, there’s no denying that Tesla is a rather exciting investment. The company’s luxury cars and futuristic products make its stock a popular choice among investors who fancy a bit of risk.
However, after a volatile 2018 and a torrid first half of 2019, everyone wonders: what does the Tesla share price forecast look like?
What makes Tesla so special?
Before we dive into the latest Tesla stock predictions, let’s first see why many choose to invest in this company today.
Even sceptical analysts and investors have to admit: Tesla has achieved many impressive accomplishments throughout its history. These, among others, include large-scale manufacturing of high-performance electric cars, earning customer acclaim, winning numerous awards and establishing a battery business that's undoubtedly ahead of its key rivals.
The company is a leader in two industries, which are on the edge of a revolution: renewable energy and cars. The auto market, for instance, has been transforming at a rapid pace for the past few years. Electric and autonomous vehicles, as well as innovations like ridesharing, are great examples of how the future of the transportation industry is being reshaped today.
This is one of the reasons behind the market valuing "disruptive" transportation companies like Lyft, Uber and Tesla so highly. The global opportunity for electric and autonomous vehicles is huge. For example, China, in particular, is already purchasing over half of the world's electric vehicles. If Tesla manages to seize more of that opportunity, the stock could easily soar.
However, there is still a lot of uncertainty in the future of electric and autonomous vehicles. The technology is still under development. Many consumers remain sceptical about their safety and advantages over traditional vehicles.
Regardless, Tesla keeps gaining more and more appreciation from its loyal customers. The company was ranked first in the Consumer Reports’ 2019 list of auto brands rated by owner satisfaction. The brand received 89 out of 100 possible points, showing that Tesla’s customers are more satisfied than those of any other auto brand.
Tesla stock price analysis
As with any other stock, there are a few factors that influence the Tesla share price. The most crucial ones include quarterly earnings announcements and the financial performance of the wider stock market. Moreover, the value of Tesla stock is heavily affected by emerging competitors in the electric vehicle industry.
Let's have a look at the Tesla stock price trend since the beginning, starting from 2010.
Ever since its IPO, the company's stock has experienced periods of extreme volatility. For 7 years, from June 2010 to June 2017, the share price was mainly in the uptrend, going from $23.83 up to $361.61. Between July 2017 and November 2018, the stock witnessed many ups and downs, with an average price range of $250-$350. After that, a downtrend took place.
On May 25, 2019, shares of the electric-vehicle maker fell below the mark of $200 for the first time in over two years. This happened after the company’s CEO, Elon Musk, said that if Tesla didn't make "hardcore" cost cuts, it would be out of cash in 10 months. This statement resulted in the company getting bombarded by a series of negative analyst notes and concerns about the company's liquidity.
In 2019, from the end of May to the beginning of July, the stock was experiencing an upward momentum, but it was short-lived. At the time of writing, August 30, the share price of Tesla was $225.61.
Tesla stock predictions: Tesla shares – buy or sell
Catherine Wood, CEO of Ark Invest, believes that Tesla could reach the price of $4,000 a share or even higher in the foreseeable future. In May 2019, she said to CNBC’s ETF Edge: “our bear case has it going to $700 and our bull case is $4,000, but now we think that’s too low,” explaining that Ark’s five-year plans were already based on the assumption of huge growth.
Alexander Haissl, Wall Street analyst at Berenberg Bank, predicted that in 2020 Tesla’s share price will be around $500.
In 2017, Ron Baron, an American billionaire investor, said in his interview with CNBC that Tesla stock will reach $1,000 by 2020, expecting the company to report $70 billion in revenue and $10 billion in operating profits in the same year.
According to CNN Business, 30 analysts have offered their own 12-month Tesla share price predictions. They have set a median target of $241, with a low estimate of $140 and a high estimate of $530.
Based on the information from Gov Capital, Tesla stock is set to reach an overwhelming price of $2429.145 by September 2024.
Here is what their 1-year forecast looks like:
However, not all market experts are enthusiastic about Tesla. Many do not believe in the stock moving upward.
This is what price predictions of another popular forecasting service, Longforecast.com, look like until September 2021:
Analysts at Wallet Investor have also taken a bearish stance, referring to the company's stock as a potentially “bad, high-risk 1-year investment option”. Considering their forecast, your current investment into Tesla may lose value in the near future.
The bottom line
However, against all odds, many investors still believe that Tesla has exciting potential that is yet to be discovered.
Investors who are eager to add some “sustainability” to their portfolio should temper their expectations and weigh all the potential risks that could threaten future profits.
If you want to try to profit from the stock’s price volatility without long-term investment commitments, you can do so through contracts for difference, or CFDs.
How to trade Tesla shares CFDs
A contract for difference is a financial instrument between a broker and a trader, in which one party agrees to pay the other the difference in the value of a security between the start and end of the trade. When you trade shares using CFDs, you speculate on the direction of the underlying asset without actually owning it.
You can either take a long or short position, depending on whether you expect the price to rise or fall. Therefore, regardless of your personal perspective on the Tesla stock forecast, you can still try to profit from its price fluctuations.
However, note that CFDs are a leveraged product. Therefore, profits, as well as losses, are magnified.
Stay up-to-date with the latest Tesla stock predictions, and keep track of the prices live with the comprehensive charts on Capital.com. Learn more about CFD trading with our free online courses and find out how to trade Tesla share CFDs with our free online guide.
Photo: Ivan Marc