Tesla (NASDAQ:TSLA) investors might want to buckle up – the road ahead could be a bit bumpy. But don’t let the turbulence fool you; the EV giant’s long-term potential is still very much in the driver’s seat.
Invest with Confidence:
- Follow TipRanks' Top Wall Street Analysts to uncover their success rate and average return.
- Join thousands of data-driven investors – Build your Smart Portfolio for personalized insights.
That, at least, is the opinion of Piper Sandler analyst Alexander Potter, who expects the first half of the year will be “choppy” for Tesla. However, the 5-star analyst goes on to add that the EV leader is “still our #1 buy-and-hold idea.”
Potter notes that Tesla’s “near-term financials (and momentum)” often hinge on two main items: vehicle deliveries and automotive gross margins. Due to the unclear timing of new product launches, the 2025 outlook for deliveries remains uncertain. The analyst thinks Tesla will deliver 1.96 million units this year (up from 1.79 million in 2024), with over 100,000 additional units expected from yet-to-be-announced vehicles and 70,000 from the Cybertruck. He acknowledges the uncertainty around these projections, noting, “We can’t defend this forecast, and there could be downside — but if so, evidence probably won’t emerge during the Q4 call.”
On the gross margin front, Potter anticipates a Q4 margin of 17%, representing a 10-basis point quarter-over-quarter decline. However, looking ahead, his outlook is more optimistic and as long as Tesla “doesn’t waffle on launching new products,” Potter anticipates a strong post-quarter performance.
As for the long-term financial outlook, Potter has actually lowered his long-term delivery forecast in his new model. Previously, the analyst thought Tesla could reach over 8 million units annually, but he now anticipates a maximum delivery volume of roughly 4.6 million units by 2032. But this is where the shift in priorities will take effect, with Potter believing that once Tesla completes its current product launch pipeline, the company’s focus will shift from introducing new vehicles to driving adoption of full self-driving (FSD) software.
Lastly, on the subject of valuation, Potter thinks the long-term thesis will ultimately rely on emerging opportunities like Optimus robots and neural-net-training-as-a-service. However, these “nebulous revenue streams” are challenging to quantify within a DCF (discounted cash flow) model. As a result, Potter is now using a price-to-earnings (P/E) valuation methodology.
That results in a new price target of $500 (up from $315), based on 120x FY26 estimated EPS, positioning it in the “top-half of TSLA’s historical trading range.” From current levels, this suggests a 20% upside. Potter’s rating remains an Overweight (i.e., Buy). (To watch Potter’s track record, click here)
“By one year from now, investors should have greater clarity re: new product cadence; this should allow them to focus on other, more exciting topics (e.g. rising FSD efficacy and the implications for Tesla’s A.I. ambitions),” Potter summed up.
All in all, TSLA has 34 analyst reviews on file, split three ways: 13 Buys, 9 Sells, and 12 Holds, culminating in a consensus Hold (i.e., Neutral) rating. With an average price target of $329.63, the consensus suggests shares could be trading at a ~21% discount in a year. (See Tesla stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
