Tesla’s Journey To $1,000 In 2020 by Benzinga
Seth Klarman: Value Investing In A Market Bubble [1997-2001]
This is part three of a multi-part series on Seth Klarman, value investor and manager of Boston-based Baupost Group. Part one can be found here and part two can be found here. To ensure you do not miss the rest of the series sign up for our free newsletter. In part two of this series Read More
The road for Tesla investors in 2020 has been a bumpy one, but investors are certainly happy about the destination.
Tesla's Road To $1,000
- Tesla kicked off 2020 on a bullish note on Jan. 3 when the company reported 112,000 vehicle deliveries in the fourth quarter, up 23.4% from the previous year. Tesla stock initially jumped 4% to $448.
- On Jan. 9, three analysts expressed concern about Tesla’s high share price. Baird downgraded Tesla to Neutral, CFRA downgraded it to Sell and Bernstein said the “huge recent surge” in Tesla had made them “incrementally cautious.” At that point, the stock was trading at $481.
- On Feb. 1, ARK Investment's Cathie Wood said Tesla is "an exponential growth company" and gave the stock a $7,000 price target.
- On Feb. 4, billionaire Tesla investor Ron Baron said he believes Tesla could reach $1 trillion in revenue in 10 years, driving Tesla’s share price up to $887.
- On Feb. 25, Jefferies downgraded Tesla and said the company’s valuation should be “grounded into some visibility on market size and potential profitability.” At that point, the stock was trading at around $800.
- On March 25, Tesla was forced to completely shut down production at its primary factory in Fremont due to COVID-19. The stock dropped to $539.
- On April 3, Tesla reported 88,400 vehicle deliveries in the first quarter of 2020, up 40.3% from a year ago. The following Monday, Tesla stock closed at around $516.
- On April 13, Tesla surged 17% following a report that Tesla is producing two additional Model 3 variants at its Shanghai plant in China. The stock closed at $745.21.
- On April 29, Tesla reported a $16 million profit in the first quarter and its third consecutive profitable quarter for the first time in history. Tesla shares jumped to $800.
- On May 1, CEO Elon Musk tweeted “Tesla stock price is too high imo.” In response, the stock dropped to $701.
- On May 11, the China Passenger Car Association reported that Tesla Model 3 sales dropped 64% in April compared to March. Tesla stock closed that day at $811.
- On May 18, Tesla finally reopened its Fremont factory for production after nearly two months of closure and a public dispute between Musk and Alameda County over workplace safety. Tesla shares closed at $813.
In the three weeks since the Fremont factory reopened, Tesla's stock has continued to trade higher amid broad market strength and optimism that the economy could ramp back up sooner than expected.
But while 2020 has been very good to Tesla investors up to this point, Wall Street analysts are expecting more volatility ahead. The average price target among the 31 analysts covering Tesla is $650, suggesting 34.6% downside from current levels.
Tesla has certainly had some positive developments in 2020, especially its surprise profit in the first quarter. However, second-quarter numbers could be very ugly considering the lengthy shutdown, and the stock is certainly pricing in high expectations up 385% in the past year.
Do you agree with this take? Email [email protected] with your thoughts.
Bill Haddad contributed to this article.
Latest Ratings for TSLA
|Jun 2020||Goldman Sachs||Downgrades||Buy||Neutral|
|Jun 2020||Morgan Stanley||Downgrades||Equal-Weight||Underweight|
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.