Tesla stock has run up 135% since January, but it’s still 40% off its 2021 highpoint. Is this recent strength building towards a new high stock price for Tesla
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How Is Tesla Stock Doing Now?
On the first trading day of 2023, Tesla stock opened at $118.47. It then dipped to $104.64 before moderating to $108.10 at close. Fortunately for shareholders, the disappointing start to the year would not be a sign of things to come. As of late-September, TSLA is trading in the mid-$250s—which marks an impressive year-to-date gain.
Tesla’s 2023 climb has not been linear, however. The stock price spiked in July above $290, only to fall to $215 in August.
Ups and downs aren’t unusual for the electric vehicle maker. Tesla generates many headlines, and each one can prompt a swing in the stock price, for better or worse.
In July, for example, Tesla stock jumped from unexpected good news about the company’s second quarter. First, Tesla announced consensus-beating vehicle production and delivery numbers. A few weeks later, the company reported higher-than-expected revenue and EPS.
In August, the stock dipped on news that Tesla had cut prices in China to defend its market share. But investors moved on quickly. The stock rose again when the China Passenger Car Association reported year-over-year and month-over-month sales growth on Tesla EVs made in China.
Going forward, factors that could prompt more volatility for Tesla stock include:
- Competitive environment and growth expectations in China’s EV market
- Tesla’s ability to defend market share and execute while maintaining margins
- Ongoing development of full self-driving (FSD) capabilities
- Cybertruck launch
- Performance and adoption of Tesla Semi
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Tesla Stock: Is it Overvalued Or Undervalued?
Tesla has a P/E ratio of 70. For context:
- Ford’s P/E ratio is 12.
- Apple’s
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- The average P/E ratio for the technology sector of the S&P 500 is 30.
- Amazon’s
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Tesla’s multiples are high by most standards, though not nearly as high as they were in 2020 and 2021. Still, analysts don’t agree on whether Tesla is overpriced, fairly priced or underpriced.
The lack of consensus is rooted in a few factors:
- Tesla has a history of delivering on shareholder value, even as it has missed deadlines and fielded a range of operational challenges.
- Tesla is an EV maker, energy storage company and, potentially, an innovator in driverless taxis and a cloud computing player. The business is complex enough to make for difficult comparisons. Those who view Tesla as a car company say it’s overvalued. Those who view Tesla as a tech company are more comfortable with the high multiples.
- CEO Elon Musk is as polarizing as his company. He’s either a visionary or a quirky leader who makes promises he can’t fulfill.
To form an opinion on Tesla’s pricing, start by deciding what kind of company Tesla is. Considering Tesla’s current valuation, it’s clear most investors don’t view Tesla as a carmaker. Car sales alone don’t justify Tesla’s stock price. Investors are paying a steep premium because they believe in Tesla’s ability to innovate, open new markets, diversify its business model and create massive shareholder value.
Here’s what it comes down to: If you’re confident Tesla will fend off EV competition, remain dominant in the EV market and kick off new growth cycles in other markets, today’s stock price makes sense. Yes, there are risks—plus a premium price tag and potentially long timeline. But those are trade-offs you make to invest in high-growth stocks.
If you don’t have that confidence, Tesla is an expensive risk. You might prefer an exchange-traded fund that includes Tesla as a major holding, as recommended by Erik Sherman in his coverage of the best EV stocks.
Will Tesla Stock Go Up?
TSLA currently trades for about $245. The consensus price target is $239.43, which implies modest downside.
The consensus estimate doesn’t tell the whole story, however. The bullish camp predicts steep growth for TSLA, while Tesla bears believe the stock is only headed down. I’ll cover both ends of the spectrum below.
What Is TSLA Stock’s Price Prediction For 2025
Tesla stock forecasts range from $85 to $400.
The $85 target comes from Craig Irwin, a Roth Capital analyst. Irwin believes Tesla is grossly overvalued today. In his view, steeper competition, factory shutdowns and launch delays put Tesla at risk of losing market share. Immediate threats include Ford and Chinese EV maker BYD.
Adam Jonas of Morgan Stanley
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Famous growth investor Cathie Wood has a similar vision, albeit with a longer timeline. Citing Dojo as a growth factor for Tesla, Wood predicts Tesla will hit $1,400 or more by 2027.
Wood has a long history of promoting Tesla. In a 2018 televised interview, she said Tesla would hit $4,000 by 2023. She was partly right. Adjusting for splits, Tesla hit that mark two years early in 2021. Unfortunately, the stock price didn’t hold. Tesla has since fallen 40%.
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Is Tesla A Good Long-Term Stock?
Tesla is an interesting long-term stock that may face near-term headwinds. The company’s leading market share in the global EV market is attractive. According to Fortune Business Insights, EV sales globally will grow at a CAGR of 17.8% between 2023 and 2030.
In dollars, that means the $500 billion in sales this year will grow to nearly $1,580 billion in seven years. Contributing factors are favorable regulatory environments for EVs around the world, rising fuel prices and growing adoption of alternative fuel vehicles.
Tesla’s leadership expects to capitalize on that growth. The company has expressed a long-term goal of expanding vehicle production to 20 million by 2030. In 2022, Tesla produced 1.31 million cars.
Longer term, Tesla ideally wouldn’t be dependent on electric passenger car and truck sales for growth. The company’s fast-growing energy segment should help in that regard. Launch of driverless taxis and a possible move into cloud computing with Dojo are also potential growth engines.
Challenges To Watch
Competition will be a major challenge for Tesla in the years ahead. Going forward, consumers will have more choice in electric vehicles as other automakers increasingly look to win a piece of the EV market. We already know Tesla is willing to defend its market share by lowering prices. That will depress margins and, possibly, sales growth.
Tesla also has a history of missing its own deadlines. That will be a liability if other EV makers begin innovating and executing faster. Already, the years-long delay on the Tesla Cybertruck launch has opened the door for Ford, Rivian and GMC to build audiences for their EV trucks.
Despite those challenges, Tesla still has good growth prospects. But as competition heats up, its growth trajectory may be tempered relative to the company’s history.
Bottom Line
Tesla is a risky stock, but one that could play big rewards down the line. If Tesla can execute near-term product and feature launches while maintaining its market share without upending margins, the future will be bright. Longer-term, the energy business, driverless taxis and a cloud computing service using Dojo could end up justifying Tesla’s high price tag today.
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