Tesla Stock Forecast (2024)

Love him or hate him, Elon Musk disrupted the auto industry with Tesla. Since its founding in July 2003, Tesla has grown into one of the world’s largest publicly-traded companies based on market capitalization.

Primarily known for its electric vehicles, Tesla also produces energy generation and storage systems, areas that have experienced increased demand in recent years.

However, Tesla has faced some significant challenges. Musk’s sometimes eccentric behavior and social media presence have affected public perception about the company, and supply chain disruptions and labor issues have also caused production delays.

Tesla’s stock forecast is murky. Although the company’s stock has significant potential, it also faces substantial challenges. Before investing your money in Tesla, here is what you should know about its past performance and future potential.

How Did Tesla (TSLA) Perform in 2022?

In 2022, Tesla performed well. Its total revenue was $81.46 billion, up $27.64 billion from the previous year.

Sales revenue increased 52% from the prior year as the company increased deliveries of its Model 3 and Model Y vehicles. And revenue from automotive regulatory credits increased by 21% from the prior year.

However, the company missed its 2022 delivery target numbers. It sold 1.3 million vehicles in 2022, but that number was lower than the required amount to meet Musk’s pledge of growing deliveries by 50% nearly every year.

Tesla Stock Returns for 2022

Tesla’s stock had a meteoric rise through the previous decade, and TSLA reached over $400 per share in October 2021.

However, its performance was rockier last year. On Jan. 1, 2022, Tesla’s stock price closed at $399.93. But 12 months later on Dec. 30, 2022, its price was just $123.18 at market close—a 69% decrease.

Tesla did not pay out dividends in 2022, but that’s typical of a company focused on growth. According to the company’s annual report, it has never paid dividends, nor does it anticipate paying dividends in the foreseeable future.

Tesla’s Stock Performance Over the Past Five Years

Tesla has faced challenges over the past 12 months, but it still has delivered significant returns over the last five years.

Between June 1, 2018 and June 1, 2023, Tesla’s stock price increased from $19.06 to $203.93 per share. If you had invested $1,000 in Tesla in June 2018, your investment would have been worth $10,604 in June 2023.

Compare Tesla’s performance to that of the Nasdaq Composite index, which tracks the performance of 3,000 stocks listed on the Nasdaq exchange. For comparison’s sake, we chose to use the Fidelity Nasdaq Composite Index Fund (FNCMX), an index fund that aims to mirror the price and returns of the Nasdaq Composite Index.

From June 1, 2018, to June 1, 2023, the price of the FNCMX increased from $99.46 to $163.68—a 65% increase over five years.

If you had invested $1,000 in FNCMX in June 2018, it would have been worth $1,636.80 in June 2023. In this case, investing in Tesla rather than the index fund would have allowed you to grow your money by almost $9,000 more.

Challenges and Opportunities Facing Tesla

Tesla is a household name, even among those who don’t typically follow the automotive or technology industries. Although the company’s vehicles are well-known, it faces some substantial challenges.

Tesla’s Strengths

Innovation

Musk built Tesla’s reputation with innovative technology. While there have been hybrid vehicles and other attempts at electric vehicles, Tesla disrupted the industry with its all-electric vehicles that were sleek and powerful. And by using a direct sales model rather than dealerships, it appealed to buyers looking for an alternative to the traditional sales model.

Tax Incentives

Interest in Tesla’s vehicles remains strong, and one factor affecting the demand is the federal tax credits available. The government introduced tax credits for new clean vehicles purchased in 2023 or after, providing buyers with a tax credit worth up to $7,500.

That credit is a significant incentive, and for buyers looking to purchase a new car in 2023, it may be enough to convince them to go electric and invest in a Tesla.

Tesla’s Weaknesses

Competition

At Tesla’s height, it stood out for its all-electric vehicles due to their quick acceleration and long charging range. Well-known auto manufacturers like Ford and Chevrolet were still relying on gas-powered vehicles, so Tesla was a leader in the electric vehicle market.

Today, the auto industry is much different. More manufacturers are producing electric vehicles, and several companies, such as Lucid Motors (LCID), are producing vehicles that could be significant challengers to Tesla.

Supply Chain and Labor Issues

To meet its delivery targets, Tesla will have to ramp up its manufacturing capabilities in its facilities in both the United States and abroad. And because the company relies on global suppliers of many of the components needed to build its vehicles and energy systems, it can be derailed by supply chain issues and shortages.

How Will TSLA Perform Over the Next Few Years?

Tesla has been a strong performer in the past. Although it has faced some difficulties in the past year or two, analysts are optimistic abouts its future.

In a Nasdaq analysis of recommendations from 30 analysts, Tesla had a “buy” recommendation. Those analysts gave Tesla an average 12-month price target of $198.54, with a high target of $280 and a low target of just $85.

For long-term investors looking for a company that could deliver higher-than-usual returns, Tesla may be a good bet. But to limit the amount of risk you take on, it may be a good idea to diversify your portfolio by investing in index funds, mutual funds or exchange traded funds (ETFs) so your investment isn’t reliant on the performance of a single company.