Tesla Price Prediction: Bull, Base, and Bear Scenarios

Tesla's Stock Performance and Market Outlook

Shares of Tesla, Inc. (NASDAQ:TSLA) have experienced a significant surge over the past five trading sessions, rising 21.15% after gaining 7.23% in the previous five days. This movement has pushed the stock into positive territory for the year with an 11.36% gain. However, it is still down 1.33% from its year-to-date high on January 15 and 12.08% below its all-time high from December 17, 2024. In July, Tesla reported Q2 results that showed a 12% year-over-year decline in revenue, a 23% drop in earnings per share (EPS), and a 42% decrease in operating income. Vehicle deliveries fell to 384,122 units, a 14% decrease compared to the same period last year. Since entering the Indian market in mid-July, Tesla has only received 600 orders.

In June and July, several analysts revised their price targets for TSLA. Goldman Sachs increased its target to $315 from $285 while keeping a "Neutral" rating. Benchmark raised its target to $475 from $350, maintaining a "Buy" rating following the successful launch of Tesla's robotaxi business in Austin. UBS increased its target to $215 from $190 but kept a "Sell" rating. Mizuho lowered its target to $375 from $390 while maintaining an "Outperform" rating.

Despite past volatility, Tesla's stock has seen significant downturns before. While the stock may not be ready to shift from decline to growth, there could be opportunities if the current drawdown worsens. The company's long-term potential depends on its ability to deliver on key drivers. Currently, the bears are gaining ground as Elon Musk’s role at the Department of Government Efficiency becomes less newsworthy and the hype around his friendship with Trump fades. However, increasing competition from EV startups like Jeff Bezos-backed Slate, which offers affordable models, poses a challenge to Tesla's market position.

Key Drivers for Tesla's Growth

Tesla remains a leader in the EV revolution, holding a dominant global market share despite recent struggles. The company faces various headwinds that could impact its long-term performance. Investors should pay attention to the key drivers that could shape Tesla's future.

Cybertruck and Robotaxi Market

The Cybertruck was a highlight during Tesla's robotaxi event. While the vision of a reasonably priced robotaxi generating passive income for owners is appealing, the timeline for such a future is uncertain. If Tesla can advance full self-driving (FSD) efforts, this vision could become more realistic. However, technical and regulatory challenges remain. Analysts like Cathie Wood believe autonomous ride-hailing could represent a multi-trillion-dollar opportunity, with Tesla potentially reaching $2,600 per share by 2029. Some analysts, including Wedbush Securities' Dan Ives, predict a bull case where TSLA could reach $550 per share, representing an 86.35% increase from current levels.

Optimus and Home Robotics

Optimus, Tesla's humanoid robot, was showcased at the robotaxi event. While it amused attendees, the question remains whether it will be a commercial success. The home robotics market is growing, with many competitors investing heavily. However, this also validates the potential of such innovations. A 2030 launch for Optimus could lead to a reacceleration of Tesla's growth rate.

Bear Case for Tesla's Share Price

Despite these positives, there are significant concerns. The Cybertruck faces challenges, including FSD capabilities and cost issues. A recall of nearly every Cybertruck due to a potential crash risk in late March highlighted these concerns. Analysts like Ross Gerber have expressed doubts about FSD and expect a 50% crash in 2025. Goldman Sachs and Guggenheim have also lowered their price targets, citing deteriorating fundamentals and weak delivery trends.

Negative press surrounding Tesla includes reports of higher fatal accident rates and ongoing protests against the brand. Additionally, insider and institutional activity shows a lack of confidence, with minimal purchases and significant sales by executives and major investors.

Base Case for Tesla's Share Price

The base case for Tesla lies between the extremes of the bull and bear scenarios. Wall Street analysts have set a median one-year price target of $306.42, indicating a 27.45% potential downside from current levels. While Tesla's valuation appears slightly undervalued based on forward P/E and P/S ratios, the success of its growth drivers will determine its future trajectory.

In summary, Tesla's stock performance and market outlook reflect a mix of optimism and caution. Investors must weigh the potential of key drivers like Cybertruck and Optimus against the challenges posed by competition, regulatory hurdles, and shifting investor sentiment.