Tesla’s Stock Price Could Nearly Double In 2018 – 10 Predictions
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Tesla stock price has risen tremendously over the past 52-weeks, up nearly 62 percent, as investors have turned their attention to the Model 3, and the company’s future. But what was the future, is now the present as 2018 approaches, and that leads us to our our 10 Predictions for 2018 list: #10 Prediction- Tesla’s stock price rises to nearly $600, and a market cap of $100 billion. (We are going in reverse order, starting with #10 working our way to #1)
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Amazon Pass
Investors seem to be willing to forgive Tesla for its massives loses, significant cash burn rates, and the company inability to never meet a deadline or hit a delivery target. In a lot of respects, it feels as though the stock market values Tesla in a similar way to how it values Amazon.
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Amazon gets all sorts of passes as well, a company that seems to pick and choose when it wants to miss, meet, or beat analyst earnings estimates. Tesla is not all that different from its delivery targets, burn rates and bottlenecks.
All of these issues have not hurt Tesla ability to raise cash in the past either. The company even has a market cap that is larger than Fiat Chrysler ($FCAU) and Ford ($F), and for a time Tesla also had a market cap higher than General Motors ($GM).
TSLA Market Cap data by YCharts
Tesla Future Sales Growth
Tesla stock price currently stands at $315 and is likely not finished going higher. The chart below shows in a pretty easy to understand way how the market values the stock. Tesla has consistently traded around 2.75 times one-year forward sales estimates. Amazon is in nearly the same territory as Tesla, trading around 2 times one-year forward sales estimates.
TSLA PS Ratio (Forward 1y) data by YCharts
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Notice that Amazon P/S is starting to rise and breakout, and that is likely because investors are beginning to anticipate Amazon’s revenue growing at faster pace. Tesla’s analyst consensus sales estimates are expected to increase to $28 billion in 2019. It would mean that Tesla market cap could rise to nearly $80 billion in 2018 at 2.5 times forward sales estimates, and perhaps as high as $85 billion should it trade closer to the upper end of its historically forward sales ratio closer to 3.
TSLA Revenue (TTM) data by YCharts
Increasing Estimates
Revenue estimates for 2019 have been steadily rising throughout the year, and should that trend continue Tesla valuation could approach $100 billion in the not to distance future, perhaps as early as next year. Sales estimates for 2019 could start pricing in the Tesla Semi-Truck, and possibly faster growth in the company’s energy and battery storage projects. As the chart below shows as well, revenue estimates for 2019 have risen by nearly 20 percent over the past year. Could revenue estimate climb 20 percent again, to around $33 billion?
At 3 times sales of $33 billion, Tesla achieves a market cap of $100 billion and a stock price assuming no dilution of roughly $600.
The purpose of the 10 predictions is for fun and to think about the year to come. It helps to organize thoughts and think about potential themes and trends that could develop. See our 10 predictions for 2017 and judge for yourself how we did.
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Michael Kramer and the Clients of Mott Capital own shares of TSLA
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.
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Tags: #Tesla #$600 #Predictions_For_2018, #Market_Cap