And for a car manufacturer like Tesla, lots of it. Even its futuristic Cybertruck -- a subject of immediate ridicule after its 2019 reveal -- has posted strong preorder numbers. Finally, there’s the Elon Musk factor. In July, the company announced an odd little milestone: it had been profitable for four straight quarters. Copyright © And with the company preparing to open new Gigafactories in Shanghai and Berlin, Tesla should be able to ramp up production to meet the demand that comes with a valuable brand name. Maximum, minimum and close prices.TLong term Tesla stock price predictions. Now, preorders aren't sales, but clearly Tesla is a popular brand. Even growth investors might pause before investing; to justify its current stock price, TSLA would have to double its margins and grow 65% annually for the next 8 years. Today, Tesla trades at a staggering 15 times price-sales (P/S) ratio, or 135 times forward price-earnings (P/E). 2020 InvestorPlace Media, LLC. As with any other stock, there are a few factors that influence the Tesla share price. Ramping up production on the Model 3 -- which still ain't a cheap car -- is what allowed Tesla to finally start turning a profit, and to generate significant operating cash flow. The economy has suffered its worst recession in decades, yet stock prices are reaching all-time highs. Following split announcements, analysts typically raise earnings estimates 2.2% – 2.5% and adjust their target prices upward to match. Although these may turn out to be good cars in their own right, Tesla's real competition seems to be itself, as Model S and X sales tumbled in the wake of the Model 3's debut. One financial services company, Jefferies, believes Tesla has the potential to reach $400 next year – considerably beyond the all-time high of $383 recorded in 2017. Out of nowhere, Elon Musk is building one of the most successful and innovative companies ready to compete with the top car manufacturers on the globe. By 1972, the Nifty Fifty’s average price-to-earnings ratio had ballooned to 42x, compared to the average S&P 500 stock at 19x. As a car company -- a comparatively low-margin business -- Tesla is unlikely to ever be able to outperform enough to justify its lofty valuation. Open, maximum, minimum, close and average prices within every month. However, the same flywheel can also run in reverse. In other words, it's going to take a long time for Tesla to pay off (or even pay down) that debt load -- certainly more than five years. Since the start of 2020, FAANG stocks and Tesla have outperformed the market many times over as investors have rushed to buy large-cap growth companies. Many will profit by getting out in time, but that doesn’t mean everyone will. In fact, according to Brand Finance's annual global brand report, it's the fastest-growing brand in the world in terms of value, worth $12 billion in 2019, a 65% increase over 2018. Here are five reasons why Tesla may keep rising before a correction. Last week, TSLA announced a 5-for-1 stock split. The third reason has to do with analyst expectations during stock splits. As VIX normalize, stocks typically rise. Tesla (NASDAQ: TSLA) stock has been on a wild ride upwards this year. The foundation is built and the company is rapidly expanding. But even if Musk's plans pan out, and Tesla is able to remain popular and ramp up car production to meet demand, it's not going to be completely out of the woods. Fourth, markets continue to expect further gains, which would also send Tesla stock higher in the short-term. Tesla share price predictions 2020. Investors today are seeing something similar in tech stocks. There's an undeniable "cool factor" about Teslas, though, that's unlikely to dissipate in five years. Then, they questioned the battery technology. That’s because the S&P 500, which doesn’t yet include TSLA, will only add companies with four straight profitable quarters. I don't know where Tesla's stock will be in five years. Excitement over electric vehicles and fast-growing tech companies means investors will continue ignoring both traditional and VC valuation methods alike. As of April 30, multiple funds managed by Baron Funds owned Tesla, including the Baron Partners Fund, which had 25.5% of its $2.2 billion in assets invested in Tesla… If this were the startup world, investors might reach for the champagne to celebrate. From almost the moment it made its debut on the public markets, Tesla has faced questions about its viability. The second reason TSLA might spike has little to do with the company itself. The Man Who Recommended 23 1,000% Winners Is Revealing His #1 Stock for 2020. ETFs gained $206.1 billion in funds in the first half of 2020 (compared to $111.2 billion in 2019), and investors have poured another $10 billion into ETF funds since July. Shares soared 50% after the company announced a stock split on Aug. 11 , bringing its 2020 gains to an astonishing 370%. That’s a 95% drop in Wall Street’s hottest stock. Article printed from InvestorPlace Media, https://investorplace.com/2020/08/5-reasons-why-tsla-stock-will-rocket/. Tesla stock price analysis and history. Throughout it all, Tesla's reputation, its footprint, and -- for the most part, anyway -- its share price grew and grew and grew (as did its debt load; more on that later). TSLA is in for a rough ride. These companies included 3M (NYSE:MMM), Procter & Gamble (NYSE:PG) and IBM (NYSE:IBM), among many other blue chips of the day. He seeks growth and value stocks in the U.S., in Germany, and beyond! He's a wild card when it comes to making any predictions at all about Tesla's future. Cumulative Growth of a $10,000 Investment in Stock Advisor, Where Will Tesla Be in 5 Years? What an amazing story Tesla is. Yet, even with sky-high valuations today, Tesla shares will probably keep rising in the near-term. Getting there, though, wasn't half the fun, at least not as far as Tesla's balance sheet was concerned. And by detached, they mean entirely detached. As of 2020 October 10, Saturday current price of … Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. It's easy to forget, but Tesla's original strategy was to introduce a luxury sports car (the Roadster) at a very high price point, then a luxury sports coupe (the Model S) at a slightly lower price point, and finally a mass-market sedan (the Model 3) at a more affordable price point. Tesla Inc Stock Forecast. Nasdaq Secondly, the VIX index, a measure of market volatility, is still declining towards its long-term levels. It's worth remembering, though, that Tesla's plan all along has been to transition to higher-volume sales of lower-priced models. While there are no guarantees that Tesla will get added to the S&P 500, its most recent profitable quarter makes it far more likely. If Tesla shares start falling, they can crash hard in a self-reinforcing cycle. And when it's a technologically advanced vehicle like an electric car with an extensive software system and self-driving capabilities, it takes even more planning and infrastructure...and tons of money. The market peaked in 1973 when Polaroid and Disney (NYSE:DIS) reached P/E ratios of 94.8x and 71.2x. Heck, Musk himself recently tweeted that the stock was overvalued.