Company / Analytics

Analytics, 29 December 2021

Why Investors Should be bullish on Tesla in 2022?

Analyst at Wedbush believes Tesla “is in a clear position of strength heading into 2022.” The analysts see three catalysts, including China’s demand, driving the stock higher.

As of December 28, Tesla CEO Elon Musk has exercised all of his options expiring next year, signaling an end to his stock sales that triggered a fall in the share price of the world’s most valuable carmaker.

Tesla shares lost about a quarter of their value after Musk in November asked his followers on Twitter if he should sell 10% of his holdings. They have rebounded to $1,088.47 but are still below the record closing high of $1,229.91 in November. The stock has gained 54.5% in 2021 and its market capitalization has moved above $1 trillion.

Wedbush has a current base price target on Tesla shares of $1,400 and a bull case target of $1,800. The analysts are maintaining their Outperform rating on the stock.

Tesla stock likely to outperform in 2022

Analysts believe Tesla “is in a clear position of strength heading into 2022.” The analysts see three catalysts, including China’s demand, driving the stock higher.

China will catalase Tesla’s performance in 2022. The country will make up 40% of deliveries for the electric-vehicle maker in 2022. China is also worth $400 a share to Tesla next year. “We believe by the end of 2022 Tesla will have the capacity for overall ~2 million units annually from roughly 1 million today.” Analysts believe Tesla has a “high-class problem of demand outstripping supply.” The key to alleviating these issues center around Gigafactory openings in Austin, Texas, and Berlin that will “alleviate the bottlenecks of production for Tesla globally.”

The EV maker also should be able to smooth out supply-chain issues that have been a drag on overall unit growth for Tesla in 2021.

“While logistical hurdles will be a near-term cost burden, we importantly believe Tesla has the potential to further expand its auto gross margin and profitability profile over the next 12 to 18 months especially with more higher-margin cars being sold and produced in China,” the analysts added.

Stock to rise after CEO Musk exercise all options

Tesla shares lost about a quarter of their value after Musk in November asked his followers on Twitter if he should sell 10% of his holdings. They have rebounded to $1,088.47 but are still below the record closing high of $1,229.91 in November. The stock has gained 54.5% in 2021 and its market capitalization has moved above $1 trillion.

As of December 28, Tesla CEO Elon Musk has exercised all of his options expiring next year, signaling an end to his stock sales that triggered a fall in the share price of the world’s most valuable carmaker. In total, the Tesla CEO exercised options on 22.8 million shares, which were due to expire in August. He also sold 934,090 shares for $1.02 billion to pay for taxes, according to filings. He has offloaded $16.4 billion worth of shares since early November when he said he would sell 10% of his Tesla stocks if Twitter users agreed.

Should I Buy Tesla Stock?

The current consensus among 41 polled investment analysts is to buy stock in Tesla Inc. This rating has held steady since December when it was unchanged from a buy rating. Meanwhile, the 34 analysts offering 12-month price forecasts for Tesla Inc have a median target of 924.50, with a high estimate of 1,580.00 and a low estimate of 67.00. The median estimate represents a -13.67% decrease from the last price of 1,070.87.

Wedbush has a current base price target on Tesla shares of $1,400 and a bull case target of $1,800. The analysts are maintaining their Outperform rating on the stock.

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