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Valued at a market cap of $842.7 billion, Tesla, Inc. (TSLA) is a leading automotive player specializing in electric vehicles and energy solutions. Based in Austin, Texas, it designs and manufactures electric vehicles, energy generation, and storage systems, positioning itself as a pioneer in sustainable transportation and clean energy.
Shares of the EV maker have underperformed the broader market over the past 52 weeks. TSLA has risen 25.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 41.7%. In 2024, shares of TSLA are up 4.4%, compared to SPX’s 22.3% gain on a YTD basis.
Zooming in further, TSLA’s underperformance becomes more evident when compared to the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 33.9% gain over the past 52 weeks and nearly 12% return on a YTD basis.
Tesla has underperformed due to a significant increase in unsold inventory, driven by slower delivery volumes and growing competition, particularly in markets like China. Additionally, high interest rates have made vehicle financing more expensive, while diminishing pricing power has led to a drop in average selling prices, further impacting demand.
However, Tesla shares soared 21.9% on Oct. 24 after the company reported Q3 results that surpassed analysts' gross margin expectations, achieving 19.8%. The positive sentiment was further bolstered by a 6.4% quarter-on-quarter growth in vehicle deliveries, marking the first delivery growth of 2024, along with encouraging guidance for vehicle sales growth of 20-30% in 2025. Additionally, investors responded favorably to news about Tesla's upcoming cheaper electric vehicle, set to begin production next year, despite a slight miss in revenue expectations at $25.2 billion.
For the current fiscal year, ending in December, analysts expect TSLA’s EPS to decline 31.5% year-over-year to $1.78. The company’s earnings surprise history is mixed. It beat or met the consensus estimates in two of the last four quarters while missing on two other occasions.
Among the 37 analysts covering the stock, the consensus rating is a “Hold.” That’s based on 10 “Strong Buy” ratings, two “Moderate Buys,” 17 “Holds,” and eight “Strong Sells.”
This configuration is more bullish than three months ago, with eight “Strong Buy” ratings on the stock.
On Oct. 29, Barclays raised its price target for Tesla to $235, maintaining an “Equal Weight” rating due to a strong Q3 gross margin and a Q4 volume forecast of over 525,000 units. The analyst notes improving fundamentals and projects 20%-30% year-over-year growth in 2025, despite ongoing debates about Tesla's autonomous vehicle strategy.
As of writing, TSLA is trading above the mean price target of $211.51. The Street-high price target of $315, implies a potential upside of 21.4% from the current price.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
