This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
What happened
Shares of electric vehicle company Tesla (NASDAQ: TSLA) jumped sharply on Monday, climbing as much as 4.5%. As of 12:30 p.m. EDT today, the stock was up 4%.
The stock’s gain was likely fueled primarily by bullish commentary from New Street analyst Pierre Ferragu.
So what
Following Tesla’s AI Day last week, Ferragu is more confident about the company’s artificial intelligence product development, noting that the presentation made New Street more comfortable with its bullish view. More specifically, he believes the growth stock will deserve a price-to-earnings multiple of 50 to 100 in the years to come thanks to the company’s advanced technology.
Though Tesla has a P/E multiple of 373 today, analysts expect the automaker’s earnings per share to grow at an average annual compound rate of about 52% over the next five years.
The analyst has a $900 12-month price target on the stock.
Now what
Tesla has guided for an average annual growth rate in vehicle deliveries of about 50% in the upcoming years, without specifying when it expects growth to slow. And management says it expects significant operating margin expansion. These two factors would easily lead to 50%-plus EPS growth.
If Tesla is right about its optimistic outlook and Ferragu is right about Tesla being able to command P/E ratios of 50 to 100 five to 10 years from now, then today’s prices for Tesla stock could be a good buying opportunity. But investors should keep in mind that there’s a lot that could go wrong with such bullish assumptions, from competitive challenges to potential production and supply issues and other unforeseen detours.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
The post Why Tesla stock jumped on Monday appeared first on The Motley Fool Australia.
Should you invest $1,000 in Tesla right now?
Before you consider Tesla, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Tesla wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
More reading
- 2 big revelations from Tesla’s AI Day event
- Up 50% in a month! Bitcoin is back over US$50,000
- Will the ASX 200 follow the S&P 500 to double its March 2020 lows?
- Why Tesla stock was up sharply on Wednesday
- Why Tesla stock fell sharply on Tuesday
Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
from The Motley Fool Australia https://ift.tt/3j8nl2e
Leave a Reply