MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN TSLA

2019 is nearly here, and that means it is time to roll out my ten predictions for the new year.  As I did last year, I will start with number 10 and work our way up to number 1 over the last month of 2018.   Enjoy!

Prediction #5 – Tesla’s Stock Rise 50% to $500 in 2019

Model 3 deliveries finally hit their full stride in 2018 helping to push the company to the largest quarterly profit ever. But a series of missteps by CEO Elon Musk including his infamous “funding secured” tweet led to a series of distraction hurting the stock.

Outperformance

Relatively Tesla’s stock had a healthy 2018, with shares of the electric car maker rising 7% through December 28. That is better than the S&P 500’s decline of 7%. The stock has outperformed the S&P 500 over the past three years as well increasing by 46% versus the S&P 500’s gain of 21%.

TSLA data by YCharts

Big Revenue Growth

2019 may be another year of outperformance for Tesla as the Model 3 production expands and deliveries begin to roll out in Europe. Analysts see revenue rising 37% in 2019 to $29.2 billion, with profits surging to $5.98 per share from a loss of $1.27 per share in 2018.

TSLA Revenue Estimates for Next Fiscal Year data by YCharts

Valuation is Cheap

The stock is currently trading with a market cap of $57.4 billion, and that means the shares trade for about two times 2019 revenue estimates. At its current price, the stock trades at its lowest valuation EVER!

The chart below shows that the market may be on the verge of re-rating the stock or restoring its price to sale multiple to its historical trend of about three times sales. Should that happen, the market cap would surge to around $88 billion raising the stock to roughly $492 per share.

 

It makes Tesla prediction #5 for 2019.

-Mike

Photo Credit Via Flickr

Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.

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