Is Tesla Stock Going to $295? 1 Wall Street Analyst Thinks So.
Shares of Tesla (NASDAQ: TSLA) have slumped during the past year over weakening sales growth and concerns over its profitability amid growing competition in the electric vehicle (EV) market.
However, Deutsche Bank analyst Ed Yu believes investors should take advantage of the dip. Yu resumed coverage of Tesla recently, rating the stock a buy and giving it a $295 price target -- about 30% above its current level. Here's why the analyst could be right.
Why buy Tesla stock
Tesla is planning to launch a more affordable model in the first half of 2025. This reflects the company's ability to drive down its manufacturing costs, an advantage that could go a long way toward further solidifying Tesla's lead in EVs.
Tesla stock has been weighed down by sluggish demand growth, but it reported a 15% quarter-over-quarter increase in deliveries in Q2, so demand seems to be improving. The company could be building momentum for another stretch of growth as it launches new models.
Most importantly, Yu sees Tesla as more of a technology platform than an automaker. It has made significant progress in artificial intelligence (AI) training using Nvidia chips. Tesla's lead in AI will differentiate it from other automakers over the long term.
In the near term, the one thing investors need to see for the stock to rebound is better top-line growth. Tesla stock looks expensive on every metric, but it's trading well within its past range on a price-to-sales basis, which means revenue growth will be the key to unlocking more gains for investors. If EV demand continues to improve and sales growth returns in 2025, the stock could climb toward Yu's price target within the next year.
Should you invest $1,000 in Tesla right now?
Before you buy stock in Tesla, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Tesla wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $694,743!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of September 16, 2024
John Ballard has positions in Nvidia and Tesla. The Motley Fool has positions in and recommends Nvidia and Tesla. The Motley Fool has a disclosure policy.
