Here’s the forecast for the Tesla share price
The Tesla (NASDAQ:TSLA) share price is very volatile for a mega-cap stock. The company has long excited investors with its futuristic ambitions, from fully autonomous vehicles to humanoid robots, and even operations on Mars. However, analysts are increasingly cautious about the valuation despite the bold promises.
The price target
The average 12-month price target from 37 Wall Street analysts is currently $307.23. Thatâs compared to a share price of $335.58 as I write. Forecasts vary widely, with a high of $500 and a low of just $19. The consensus suggests that the stock’s overvalued however, itâs around fair value if we exclude GLJ Researchâs incredibly bearish take.
But Teslaâs valuation metrics should make investors think twice. Its forward price-to-earnings (P/E) ratio’s an insane 198.87 times. Thatâs more than 1,000% higher than the consumer discretionary sector median. Other indicators â including enterprise value-to-EBIT, price-to-sales, and price-to-cash flow â are also clearly elevated.
Optimism baked in
Much of the optimism baked into the share price concerns Teslaâs ambitions beyond electric vehicles (EVs). As we know, CEO Elon Musk has repeatedly suggested that Robotaxis and the humanoid robot Optimus could transform the companyâs future and justify a far higher valuation.
However, timelines for both are relatively vague. And there have been a few disappointments of late. The full rollout of Robotaxis has faced several delays, and full regulatory approval for autonomous vehicles remains a significant hurdle. Optimus, meanwhile, still appears far from commercialisation.
Even if these technologies prove viable, questions remain over consumer adoption, pricing power, and competitive threats from other automakers and tech firms. In the case of robotaxis, infrastructure, insurance frameworks, and city-level policy are all really important, but none of these are within Teslaâs direct control.
As for Optimus, while the demo videos have drawn headlines, the path from prototype to scalable, revenue-generating product is uncertain. Investors may be underestimating how long it could take before either platform contributes materially to Teslaâs earnings.
The bottom line
Investors have been here before. Some argue that the firm has a track record of delivering against the odds, particularly in scaling its EV operations. Yet recent numbers suggest growth may be slowing.
Whatâs more, the consensus forecasts show earnings per share (EPS) falling 30% in 2025. While there will likely be a rebound in later years, this is a considerable drop. Analysts anticipate EPS growth of 82% by 2028, though such long-range estimates are inherently uncertain. Thereâs also not many analysts forecasting through to 2028.
This puts investors in a challenging position. While the long-term vision’s exciting, todayâs share price is heavily reliant on future breakthroughs rather than current performance.
For those who believe in Teslaâs ability to disrupt multiple industries, the current price might still make sense. However, I believe itâs still a rather speculative investment. And thatâs simply because those valuation figures are incredibly hard to justify. As much as I like the brand, I donât think investors should consider the stock right now.
The post Hereâs the forecast for the Tesla share price appeared first on The Motley Fool UK.
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James Fox has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
