Analyst from Wall Street recently designated Tesla as their prime investment choice. Is it worth purchasing immediately?
Tesla (TSLA experiencing a -3.25% drop) has become a significant triumph in 2024. Initially, the stock surged following the release of its Q3 earnings report on Oct. 2, displaying increased profit growth beyond expectations and robust revenue growth. Subsequently, Tesla's stock took off after Donald Trump's victory in the U.S. presidential election. Elon Musk, the CEO, had closely supported Trump financially, investing hundreds of millions to aid his election campaign. Investors now anticipate Tesla will receive preferential treatment as a result. Moreover, it has been reported that Tesla will introduce its budget-friendly Model Q in the coming year, which will be its first electric vehicle (EV) under the $30,000 mark.
The surge in momentum led to an upgrade in Tesla's price target.
Analyst labels Tesla as the "top choice"
Adam Jonas, a well-respected Tesla analyst from Morgan Stanley, raised his price target for the electric vehicle stock from $310 to $400, proclaiming it to be his "top choice" in the automotive sector. Although Jonas acknowledged that potential policy changes, such as the abolition of EV tax credits, could pose temporary challenges for the company, Tesla's focus on autonomous vehicle development may set it apart from its competitors.
Is Tesla a worthy investment?
Tesla's stock price has skyrocketed almost twice since before the Q3 earnings report, yet its valuation is now at an all-time high, trading at a price-to-earnings ratio of 110. The company's growth pace has significantly decelerated, and it is predicted to record single-digit revenue growth in 2024. Musk forecasts a minimum of 20% production growth in 2025, but the success of Tesla's autonomous vehicle endeavors will likely determine the stock's future trajectory.
Since the anticipated autonomous Cybercab isn't scheduled for production until 2026, investors may need to exercise patience with Tesla stock in 2025, as much of the positive news for Tesla is already reflected in the stock price.
Given Tesla's current financial situation and upcoming projects, it's essential for potential investors to consider their financial strategies.
Making a calculated investment in Tesla's future could require looking beyond the current high price-to-earnings ratio, considering the potential profits from the budget-friendly Model Q and advancements in autonomous vehicle technology.
