In June 2019, shares of Tesla Inc. bottomed out at $176.99 a share.
Since that time, the company’s stock price has skyrocketed by more than 220% to $580.99 as of Wednesday’s close.
But thanks to Tesla’s Q4 2019 earnings report that indicated the electric automaker increased its earnings per share to $2.14 a share from $2 a year ago on earnings of $105 million, the company looks to continue is meteoric rise.
And that rise could continue for the next couple of years.
“Under the best-case scenario, analysts estimate TSLA could earn more than $33 a share in 2022. That indicates the stock could be attractive on pullbacks,” Banyan Hill Publishing analyst Michael Carr said.
Other positive news from the report included CEO Elon Musk stating the company had no intention of raising additional capital. He said Tesla (Nasdaq: TSLA) can fund production with existing capital while maintaining positive cash flow.
Upon the news of the strong Tesla Q4 earnings, shares rose another 12% in after-market trading Wednesday.
Tesla Q4 Earnings: Still a Lot of Tesla Bears
Despite a strong December and January, other analysts remain skeptical.
Bank of America analyst John Murphy told investors Wednesday that Tesla’s recent growth was “a rude awakening,” but that he remains cautious as to its future growth.
“While we admit TSLA is a trailblazer in the electric vehicle market, we believe investor optimism about TSLA’s addressable market for electric vehicles, volume growth trajectory, and, most importantly, sustainable profits/cash flow inflection is overblown.”
He added that investing in Tesla remains a “high risk” because of the volatility of the stock.
UBS said it expected shares of Tesla to fall 28% in the coming year.
Tesla Skeptics Are Wrong And Here’s Why
While that potential volatility of Tesla’s stock might suggest it is like 1980s boy band New Kids on the Block — just a fad.
However, considering its returns are more than 12 times that of the S&P 500 since its initial public offering in 2010, that suggests that’s simply not the case.
Fad stocks would be more likely to have long-term bouncing in their stock prices. However, since 2010, Tesla — while having some blips of a downturn — has moved upward.
It’s easy to suggest a company like Tesla will simply fall off, but its long-term trend tells a different story — it tells the story of a steady rise.
Additionally, Tesla plans to increase its production capacity to include a new gigafactory in Germany. It’s also starting production of its Model Y and has already rolled out its Cybertruck.
The company’s investment and production in China could offset the potential for flat U.S. sales in the future.
While there is the potential for the stock to pull back, that pullback will likely be slight and, so long as deliveries continue to tick up and barring any significant headwinds, Tesla’s growth could continue well until 2022 and beyond.
