EV giant Tesla (NASDAQ:TSLA) has loses over 60% of its value over the last 12 months which looks like an extremely attractive buying opportunity. At the current valuation, investors who believe in Tesla’s long-term potential can now bet heavily on fundamentals that could pay off down the road. As such, we are bullish on TSLA stocks.
The global electric vehicle market is booming as it was worth US$165 billion at the end of 2021 and is expected to grow to US$434.4 billion by 2028. Pioneers like Tesla will benefit immensely from the massive uptrend.
Tesla generated an impressive $57.1 billion in sales in the first three quarters of last year and is estimated to close fiscal 2022 with record sales in excess of $81.7 billion. Although competition in the industry continues to increase each year, Tesla has effectively maintained its position as a leader in the electric vehicle sector. With the stock price trading more attractively than ever, TSLA stock could be one of the best EV shares for 2023.
Tesla is at a multi-year low
It might be tempting to view Tesla’s current plunge as a company-specific challenge, but it has a lot to do with broader market conditions. When interest rates rise, companies with inflated valuations become more vulnerable than others. Now, TSLA stock trades at just 5.1 times forward sales estimates, which is about 37% below its five-year average. Additionally, it trades at about 26 times trailing-12-month cash flows, 61% lower than its five-year average. As a result, it is trading at multi-year lows and presents itself as an attractive investment option.
Nonetheless, the auto industry is known to be cyclical, which may deter some investors. Tesla’s CEO, Elon Musk, noted that the current recession in China has sapped consumer purchasing power, which could weigh on the company’s results in the near term. However, Tesla is confident that these tough economic times are temporary and won’t hamper progress toward achieving its long-term goals.
The long-term case is firmly in place
Tesla continues to be a leader in the electric vehicle industry. in the third quarter of 2022, revenue increased 56% year over year and EBITDA increased 68%. Much of that growth was due to Tesla’s focus on innovation and optimizing its manufacturing and scalability initiatives. With such a clear vision and commitment to excellence, Tesla is in a robust position for long-term future success.
Additionally, EV sales are forecast to reach 25% of global sales by 2025, and Tesla will of course benefit from that. Tesla’s overall addressable market represents an exciting growth opportunity since the company is all-electric and therefore doesn’t have to worry about cannibalizing its sales. Additionally, its commitment to exclusively producing electric vehicles allows it to increase its brand awareness and create enduring infrastructure enhancements such as charging networks to further solidify and solidify its place in the industry.
Is TSLA Stock a Buy According to Analysts?
As for Wall Street, TSLA stock retains a consensus rating of Moderate Buy. From a total of 32 analyst ratings in the last three months, 20 buy ratings, nine hold ratings and three sell ratings were given. The average TSLA stock price targetÒ stands at $231.71, which means a 79.9% upside potential. Analyst price targets range from a low of $85 per share to a high of $760 per share.
take that away
The past few years have been exciting for Tesla investors as the company blazed new trails and redefined the expectations of industry players. The sharp fall in the share price presents a unique opportunity for those who believe electric vehicles will dominate the auto sector. Perhaps the biggest problem with investing in TSLA stock has been its high valuation, which now appears to be less of an issue.
After Morgan Stanley analyst Adam Jonas, execution will be critical for automotive companies, and Tesla remains the top choice in this regard. As such, it looks like an ideal time for investors to bet on Tesla for the long term.