So I’m late to the game and about 19,700 pages behind in this thread, but the massive price cuts stunned me and gave me interest in TSLA for the first time in 2 years. There is no money for any car manufacturer to make in the US market after this bold move by Tesla. I’m shocked at how much they’ve been able to reduce production costs. I picked up a few shares earlier today but I want to give this stock an appropriate amount of investment. I’ve read a few dozen latest pages to get up to date on this thread’s sentiment, but I didn’t see any figure on PT. What do we think would be a realistic target for TSLA in the next 2 years?
This forum generally doesn't speculate on price targets since we are generally HODLers, or at least long term investors. TSLA has had many very quick (like couple of months) 3x or more price moves in its history, both up and down. It is very hard to react when you are caught up in one of those up or downdrafts. "Surely TSLA can't go much higher (or lower) now, can it? I'll just hold off buying (or selling) until it reverses...", and then it keeps running.
To protect oneself from such angst, most of us look at company fundamentals and future earnings power. And on that metric, TSLA has almost always been a buy. Somedays it was less of a buy, somedays (like now) the control board is blaring klaxons saying BUY.
People like to say the stock market is forward looking, but when you break it down, the stock market is forward looking about 6 months tops. Additionally, it is massively affected by macro events. US and worldwide inflation/recession fears bear heavily on it. This is due to a blend of multiple factors but maybe the most important is that fund managers have a plethora of investments they can move money into, so why stay invested in an even great long term stock if that stock is going to halve in price in the next 6 months? The Economist magazine did an interesting spreadsheet analysis in 2000 looking back 100 years at all large international investment classes (all individual stock markets, currencies, commodities, real estate, gold, etc.) and analyzed what would happen if you were the world's best investor and managed to pick the best type of investment at the beginning of the year and held it for that year for every year, starting with $100 in 1900? Well, it didn't take long before that investor would have owned the world's entire wealth several times over.
The point is that fund managers (and short funds just amplify things) move money constantly trying to find the best investment for the next 6 months. Add in nervous retail investors and you have a prescription for a twitchy stock market.
By the way, TSLA didn't used to be so subject to macro effects. Small growth companies have such a large addressable market relative to their production capacity and sport such a low stock price that their stock can rise even in a bad macro environment. I own a couple of small cap biotech stocks (PSTX, ACLX) that have been on a tear the last 6 months. Back in the day in 2013 to 2015, TSLA used to be more like that in that demand was so strong and the stock price hadn't caught up to that reality, yet. But that isn't where TSLA is now.
Anyways, back to your question. To find a 1 year or, god forbid, 2 year price target, you'd have to have a pretty accurate model of the world macro environment for that time period. Good luck. What the Wall Street analysts do is model the company, and they have all these assumptions like volume, margins, commodity prices, etc. which in the end has to have a lot of macro guesstimates. And then you have to estimate what the market is willing to pay for such a company (basically, what PE ratio the market is willing to pay).
I recently read five Wall Street firm reports and most of them were in my opinion garbage because they simply didn't understand Tesla and the EV market. The one that did mostly get it was Deutsch Bank, and they had a $250 price target one year out which they just reaffirmed after the price cuts. BUT does the Russian war get hotter? What does China do? Do we get a soft landing here in the US? Etc.
Incidentally, I do personally know of a few TMCers who sold some of their TSLA about 2 years ago, pretty much at TSLA ATH. Congrats to you all!
