Investing in a single company goes against one fundamental principle of investing — diversification. Regardless, not everyone can afford to diversify, or they may want to outperform the S&P 500 with a single stock.
Tesla is the biggest EV producer
Tesla (NASDAQ: TSLA) is the largest electric vehicle (EV) producer in the world, holding a global market share of 22% from around 4.5 million EVs sold since its inception.
In 2022, every three in 20 cars sold were electric, and half of them sold in China. By the end of this year, some 14 million EVs will be sold, which is a 35% increase from the previous year, based on the International Energy Agency (IEA) projections. This number includes plug-in hybrids.
To boost sales in the largest EV market, Tesla recently cut the prices of its Model S and Model X cars in China both for its standard versions built in China and its premium versions built abroad.
Tesla is more than a car company
Aside from an array of electric vehicles, Tesla also earns revenue from its supercharging network, its full self-driving (FSD) software, which alone costs $12,000 per car, as well as its battery storage products, which grew over 220% year-over-year in Q2.
With its AI machine learning capabilities and already being far ahead with the FSD tech, Tesla can implement its knowledge into another field: robotics.
The Tesla Bot, known as Optimus, is a humanoid robot designed to solve the labor crisis. This is one of the company’s priorities as Elon Musk said in a product roadmap in 2021.
Musk estimates that the Optimus demand could be as high as 10 to 20 billion units, which would account for the majority of Tesla’s long-term value.
Analysts sentiment is mixed
TipRanks analysts don’t share my optimism. They have a ‘hold’ rating based on 28 ratings in the past 3 months. With the ‘hold’ camp outnumbering the ‘buy’ camp at 12 to 11.
Their combined average price target is $270 for the next 12 months, or 1% below the current market price of $273.
Adam Jonas, a Morgan Stanley analyst, upgraded the stock on September 11, with a price target of $400, the most bullish price target in the past few months. On September 12 Tom Narayan from RBC Capital reiterated his ‘buy’ rating for the stock with a 12-month price target of $400.
I’m picking the Tesla stock as a long-term play, beyond 12 months. Any dip to $200 and especially $100 would be an excellent buying opportunity for me.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.