Last year included a wild run for Tesla (NASDAQ:TSLA) bulls with the company’s stock up a whopping 800%. A run like that might make you think Tesla stock would have a long cooling-off period. I don’t think that’s necessarily the case.
Record deliveries in the midst of a global pandemic and entry into the S&P500 are just scratching the surface on its accomplishments.
The electric vehicle’s parabolic rise has only continued into the new year. This has earned Elon Musk, the company’s illustrious CEO the title of the world’s richest person.
With the stock trading at around $845, analysts remain at a crossroads on Tesla’s future. While some anticipate a dip, others believe Tesla stock will power three times higher. I think the carmaker a lot of fuel left in the tank.
Tesla Stock Will Power Higher in 2021
Following an initial hiccup of plant closures in March, the company was back on a mission to hit its delivery goals for the year. In late December, Tesla’s shares shot up higher as analysts expressed optimism in the company’s ability to hit 500,000 car deliveries for 2020. In its previous quarter, Tesla delivered 180,000 vehicles beating expectations.
Adding to this rally was Tesla’s highly anticipated stock split. The company announced a five-to-one stock split which brought its price to the $418 range. As expected, investors jumped at the opportunity to own more shares in the company at an affordable price.
This led the stock price to spike to more than $625 per share. While no one can know for sure if another stock split is in the cards- there is some incentive to do so. At a price range of $125 (or higher), Tesla will have the opportunity to list its shares on The Dow.
Tesla’s epic valuation is just the cherry on top. Shares of Tesla spiked by 4.9% in January, earning the carmaker a market capitalization of $800 billion.
This makes Tesla the fifth most valuable company in the world, speeding ahead of Facebook and just behind Google.
Tesla is off to a great 2021, and despite its high valuation, I think this stock has room to go higher. As Tesla, led by its tenacious CEO, continues to hit its milestones this year, investors and analysts have a lot to look forward to.
Market Sentiment and TSLA Stock
Despite a successful year for Tesla, some investors continue to remain bearish on the stock. Instance analyst Ryan Brinkman of JP Morgan gave the company a price target of just $90 which is 87% lower than its current price.
Brinkman believes that the carmaker is grossly overvalued on every metric. Sharing this sentiment is Michael Burry who predicted the subprime mortgage crisis. He says that he’s shorting Tesla and thinks this fairytale won’t have a happy ending.
Analysts who are bullish are hoping to see some bigger gains from Tesla stock. Billionaire Chamath Palihapitiya warned investors “don’t sell a share.”
He strongly believes that shares will go three times higher than their current valuation. Palihapitiya said Musk has a mission to make the world a better place and it wouldn’t be wise to bet against something that’s working.
More members in the bull camp include Dan Levy of Credit Suisse and Daniel Ives of Wedbush. Both analysts are willing to bet on Tesla’s delivery guidance for the year.
Levy believes there will be a 63% spike in deliveries in Q4 of 2019. Ives thinks Tesla’s guidance of 200,000 vehicle deliveries is an attainable goal.
The Bottom Line
In my opinion, Tesla has a lot of growth potential. I base this claim not on the company’s ability to hit 500,000 deliveries for the fiscal year so much as on the future of the EV market. This year will be a turning point for electric cars as this type of technology becomes more mainstream. Tesla will play a huge role in this growth, thanks to its $20 billion war chest.
Expansion plans for the carmaker include new factories in Germany and Texas along with a new pickup model. Tesla is also expected to enter the Indian market this year, which could add significantly to its bottom line. Tesla stock is a buy for greater gains this year.
On the date of publication, Divya Premkumar did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for InvestorPlace since 2020.