The Unraveling of Tesla’s Growth Story
As Tesla’s stock plunges in 2024, analysts are raising doubts about its once lofty growth trajectory. Historically renowned for its meteoric rise, Tesla now finds itself rooted at the bottom of the S&P 500 Index, prompting questions about the veracity of its growth narrative. Notably, Wells Fargo analyst Colin Langan has labeled Tesla as a “growth company with no growth,” capturing the essence of the skepticism shrouding the electric car giant.
The Rocky Road Ahead for Tesla
While Tesla’s delivery volumes displayed a robust 87% surge in 2021, subsequent years saw a deceleration in growth rates. The abrupt halt in Tesla’s growth trajectory has investors and analysts alike on edge. The company’s foundational promise of a 50% compound annual growth rate (CAGR) has evaporated into uncertainty, with Tesla pointing to potentially lackluster delivery growth in the coming years. Moreover, Tesla’s profit margins took a hit in the past year, with gross margins plummeting by 15% and adjusted earnings per share dropping by 23%.
Predicting the Future of Tesla Stock
Outlook on Tesla’s stock price remains as polarizing as ever, with Wall Street projections differing vastly. Experts’ estimates range from a bearish $85 to a bullish $320, signifying the market’s divided stance on Tesla’s future. Even renowned investor Cathie Wood of Ark Invest has weighed in, setting ambitious price targets for Tesla that span from $1,400 to an eye-watering $2,500. However, recent downward revisions in target prices by brokerages like Goldman Sachs indicate a growing apprehension surrounding Tesla’s growth potential.
Finding the Silver Lining for Tesla
Despite the prevailing pessimism, valuation expert Ashwath Damodaran sees a glimmer of hope in Tesla’s current valuation. Known for his skepticism, Damodaran acknowledges the buying opportunity presented by Tesla’s stock at its current levels. While Tesla faces headwinds in 2024, chiefly from slowing sales growth and contracting margins, the long-term prospects appear more promising. As the electric vehicle (EV) industry consolidates and market forces stabilize, Tesla could witness a resurgence in the years ahead.
Overall, amid the current turbulence, long-term investors may find Tesla shares at an attractive juncture, given its vast potential in transformative industries like electric vehicles and renewable energy. The recent dip in Tesla’s stock price could present a strategic opportunity for those with a long-term view.