Genius, billionaire, playboy, philanthropist and almost Tony Stark. Well, not the most accurate description, but to be fair, the person we’re talking about is definitely a genius and billionaire. It would be difficult at this stage not to have heard of charismatic visionary, Elon Musk. Whatever he does or says seems to appear in articles everywhere. But last week was one to forget for the light-hearted entrepreneur. Let’s look at what happened and whether Elon Musk can take a punch when he needs to.
Tesla’s net income plummeted 24% to $2.51 billion or $0.73 per share, from $3.32 billion or $0.95 per share, in the same quarter last year, resulting in a decrease in the company's shares by over 9%. According to the company, the reason for the decrease is the underutilization of its new factories and the increased cost of production materials. As a bonus, SpaceX's Starship rocket exploded midair. It was a hell of a week – and we’re glad we didn’t bump into Mr. Musk during it.
But let’s get back to the topic at hand – Tesla’s stock.
The financial performance of the major corporations on Wall Street is a big deal, and Tesla has always been in the spotlight. Luckily, traders and investors can monitor the market or a particular company’s affairs via the economic calendar, which provides a forecast of key economic events.
Over the past year, Tesla has been closing out on its vehicles, causing a divide among investors. One group believes that Tesla is reducing prices to eliminate competition and dominate the market, while the other group thinks that Tesla is decreasing prices as a measure of desperation to boost demand.
The company's inventory has experienced a rapid increase, skyrocketing from $6.7 billion in Q1 2022 to $14.3 billion in just a year. A surplus of inventory can pose challenges, as it may result in a permanent reduction in prices or a slowdown in manufacturing.
Although the strategy of reducing prices may be beneficial in the long run, its current impact on the financial performance of the company has been grim.
Speaking of the long run, it’s rather interesting to find out where Tesla’s stock will stand in 5 years. And if one is about to invest, what variables should be taken into account.
The first and foremost is the company’s projected plan. According to S&P Global, Tesla accounted for 65% of electric car sales in the states. Seeing that as half-way, Tesla plans to expand into Europe and Asia, especially China. And there is a serious threat coming from car-manufacturing companies like Nissan, Ford, General Motors, VW, Toyota. Tesla will have to compete for supremacy in the EV market. So Investors should calculate how much Tesla can generate in sales and profits over the next 5 years. Other variables that could affect Tesla's share price include macroeconomic and geopolitical factors.
So is it Buy, Sell or Hold? Based on short-term price targets offered by the analysts, the average price target for Tesla comes to $218.07. As for the Tesla long term forecast, Wallet Investor has estimated a Tesla 5 year forecast of $564.24 a share.
Please keep in mind that analyst-opinion should not be the main reason for making an investment. Before trading any asset, carry out your own extensive research. This is rule #1!