The Tesla (NASDAQ:TSLA) share price has been on a wild ride lately, hasn’t it? As I peer into my crystal ball for 2024, there’s plenty to chew over for would-be investors in this EV powerhouse. Let’s take a closer look.
Another wild year
The average analyst reckons Tesla’s share price will hit $211.46 in the next 12 months. Mind you, there’s quite a spread of opinions. The most pessimistic has pencilled in $85 and the optimists are gunning for $310. It’s worth noting that at about $211.75, the current share price is bang in line with the average forecast. So has the market already got it right?
Looking further ahead to the end of 2024, I reckon there’s a decent chance the shares could motor higher. With production revving up at new factories globally, those important profit margins should creep up.
CEO Elon Musk’s focus on AI and robotics has huge potential to redefine the company’s future. He frequently urges investors to view the firm not just as an automotive company but as an AI-robotics company.
Management expects to have robotaxis on the road next year. It also intends to produce several thousand of its new robots for internal use.
However, while these innovations are promising, the timeline for them to yield profits remains uncertain. Management has a history of missed deadlines, such as the delay in launching the Cybertruck. This serves as a reminder that investors should always temper expectations.
Within the EV sector, the competition is clearly heating up, with traditional car makers and plucky start-ups muscling in. And we can’t ignore the broader economic picture – if inflation and interest rates remain uncertain, folks might think twice about splashing out.
We’re already seeing the results of this uncertainty. In the first quarter of 2024, deliveries dropped 8.5% year on year — the first such decline since 2020 — followed by a 5% contraction in the second quarter. Management warned that vehicle volume growth for 2024 will likely be lower than in 2023, citing efforts to launch its next-generation vehicle, macroeconomic uncertainties, and slowing EV demand.
I’ll also be keeping an eye on Musk’s controversial opinions as the US general election draws closer. Many fear that his divisive opinions will influence the business negatively, as it has sent the shares down at times in the past.
My best guess
Weighing it all up, I reckon the shares could finish 2024 somewhere between $250 and $300. That would represent a tidy 20%-40% gain from current levels.
Of course, this is just my best guess. The firm is clearly a bit of a maverick, and its share price has been known to zig when everyone expects it to zag. The lofty valuation — with a price-to-earnings (P/E) ratio of 51.9 times and a price-to-sales (P/S) ratio of 6.7 times — means it’ll need to keep delivering the goods to justify its premium price tag.
A bumpy road
So, for those tempted by Tesla, I’d always suggest being prepared for a bumpy ride. The company has demonstrated that it can deliver impressive innovations, but the market can look beyond this at times. Controversy and hype can make many existing or potential investors nervous. But I’ll be holding onto my shares for the long term.
This post was originally published on Motley Fool
