Is Tesla a good investment?

Tesla’s Chief Executive Elon Musk has always been a colorful and controversial character. Yet even although his best efforts sometimes look like they are geared towards disrupting his car manufacturing business, under his guidance the firm seems to be going from strength to strength.

Since taking over in 2008, when electric vehicles still seemed a lifetime away, Tesla has consistently defied the odds and beat market expectations.
With the release of its first-quarter figures, this trend seems to be accelerating. Despite a global shortage of semi-conductor chips that has hit the automotive industry hard, and a still-simmering global pandemic, the car manufacturer delivered 184,400 vehicles in the quarter just ended.

This is a jump of 109% over the last year’s corresponding quarter, and a rise of 2.3% from the preceding quarter. Industry analysts had predicted deliveries of around 168,000 vehicles. These are impressive figures made even more so when you consider coronavirus, chip shortages, and increased competition in the electric vehicle market,

Is now a good time to invest in Tesla?

Leading brokerage firm Wedbush seems to think so. Wedbush analyst Dan Ives said in a release to clients –

“We now believe Tesla could exceed 850,000 deliveries for the year with 900,000 a stretch goal, despite the chip shortage and various supply chain issues lingering across the auto sector.”

He backed up his forecast by upgrading Tesla stock from a “Neutral” rating to an “outperform” rating. He also raised the target price from 950 to 1,000 and added Tesla to his list of “Best Ideas.”

This is a forecast that others in the industry agree with. New Street analyst Pierre Ferragu also upgraded Tesla stock from a neutral rating to a buy rating. He also predicted that the growth was set to continue. He pointed out that the company has a clear roadmap to continue growing its deliveries. Furthermore, he also forecasts that annual earnings per share will reach $12 within the next couple of years, a figure that is 50% higher than the consensus analyst estimate.

Looking to the Future

Short-term predictions are slightly meaningless at the moment. Chip shortages, market uncertainties, and the effects of the pandemic can still play havoc with even the most robust shares. But look to the longer term and the picture for Tesla is distinctly rosy. There is a tipping point, that is not too far away when most new car buyers are going to be looking at electric vehicles only. Tesla could not be better positioned to take advantage of this revolution.

Despite the increased market competition, they have the distinct advantage of being the name consumers most recognize when it comes to electric vehicles. Tesla also has years of experience in the technology behind these vehicles. Mainstream manufacturers looking to move to electric vehicles have a lot of catching up to do.
Tesla stock is likely to be volatile in the short term but for investors happy to sit on the stock for a few years, Tesla seems to have positioned itself perfectly to be at the forefront of a radical change to the way we transport ourselves.