Tesla’s Market Performance: Recent Highlights and Analyst Insights
A Closer Look at TSLA’s Year-Long Struggles
Valued at a market cap of $842.7 billion, Tesla, Inc. (TSLA) stands as a leading player in the automotive sector, focusing on electric vehicles and energy solutions. The company, based in Austin, Texas, designs and manufactures electric vehicles, energy generation, and storage systems, positioning itself as a pioneer in sustainable transportation and clean energy.
Underperformance Compared to Market Benchmarks
Over the past 52 weeks, shares of the electric vehicle manufacturer have lagged behind broader market trends. TSLA has risen 25.2%, compared to a substantial 41.7% increase in the S&P 500 Index ($SPX). In 2024, TSLA shares are up 4.4%, while the S&P 500 has posted a 22.3% year-to-date gain.
Consumer Discretionary Sector Comparison
When assessing performance against the Consumer Discretionary Select Sector SPDR Fund (XLY), which has gained 33.9% over the same period and almost 12% year-to-date, TSLA’s struggles become clearer.
Factors Behind the Decline
Tesla’s underachievement can be attributed to a notable rise in unsold inventory, which stems from slower delivery numbers and increased competition, particularly in markets like China. Additionally, high interest rates have driven up the costs of vehicle financing. A decrease in pricing power has also resulted in lower average selling prices, impacting overall demand.
Positive Developments Amid Challenges
On Oct. 24, shares of Tesla surged by 21.9% after the company released its Q3 results, which exceeded analysts’ expectations for gross margins, reaching 19.8%. This growth was supported by a 6.4% quarter-on-quarter increase in vehicle deliveries, marking the first delivery growth seen in 2024. Investors also reacted positively to upcoming plans for a cheaper electric vehicle slated to begin production next year, despite slightly missing revenue expectations at $25.2 billion.
Future Earnings Outlook
For the current fiscal year, which concludes in December, analysts anticipate that TSLA’s EPS will decline 31.5% year-over-year to $1.78. The company has a mixed track record regarding earnings surprises, having met or beaten consensus estimates in two of the past four quarters while falling short in the other two.
Analyst Ratings and Price Targets
Among the 37 analysts covering Tesla stock, the overall consensus rating is a “Hold,” consisting of 10 “Strong Buy” ratings, two “Moderate Buys,” 17 “Holds,” and eight “Strong Sells.”
Shifts in Analyst Sentiment
This sentiment shows a more optimistic outlook than three months ago, where only eight ratings were classified as “Strong Buy.” On Oct. 29, Barclays raised the price target for Tesla to $235, maintaining an “Equal Weight” rating based on the strong Q3 gross margin and a Q4 forecast of over 525,000 units. The analyst emphasized improving fundamentals and projects 20%-30% year-over-year growth in 2025, despite ongoing discussions regarding Tesla’s autonomous vehicle strategy.
Current Stock Performance
As of this writing, TSLA is trading above the mean price target of $211.51, with the highest Street price target set at $315, indicating a potential upside of 21.4% from its current price.
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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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
