Tesla (NASDAQ: TSLA) has consistently captivated the attention of investors in the stock market, buoyed by a devoted fanbase and its history of defying conventional wisdom in the automotive industry.
The fervent allure of the brand and its stock, coupled with a cult-like following influenced by CEO Elon Musk, has propelled Tesla to an uncharacteristically high earnings multiple for an automaker.
By the conclusion of 2023, Tesla closed with a price-to-earnings ratio of 80 and a market capitalization nearing $800 billion. Despite a remarkable 102% surge during the year, this remarkable performance can be attributed more to the allure of artificial intelligence (AI) rather than the underlying business dynamics. Notably, the company experienced a deceleration in revenue growth and dwindling profits as Tesla slashed prices on its vehicles to gain traction in an increasingly competitive electric vehicle (EV) landscape.
As we embark into 2024, bullish expectations surround Tesla, leveraging anticipation of declining interest rates, diminished EV pursuits by competitors such as GM and Ford, in conjunction with Tesla’s fulfillment of its 2023 delivery forecast, tallying 1.8 million vehicles. Furthermore, the recent launch of the Cybertruck and potential advancements in AI, encompassing the future prospect of autonomous vehicle operation and a foray into the realm of driverless ride-sharing, all contribute to the prevailing optimism.
Amidst these speculations looms the lingering query: Will Tesla once again ascend to the trillion-dollar landmark? Achieving a 27% gain this year seems conceivable, yet hardly guaranteed.
As we delve into the prospects for Tesla in 2024, it becomes imperative to ascertain whether the company can surpass the trillion-dollar threshold once more.
Image source: Tesla.
A Glimpse into Tesla’s 2024 Outlook
Although Tesla is yet to provide official guidance for 2024, a peek into the company’s trajectory for 2023 offers valuable insights into the upcoming year.
Concluding the fourth quarter of 2023 with 484,507 deliveries, of which 461,538 comprised Model 3 and Y vehicles, Tesla substantiated its full-year delivery target at 1.809 million vehicles, slightly exceeding the 1.8 million goal. The company achieved a production figure of 1.846 million vehicles.
In 2020, Tesla had earmarked a goal of achieving 50% compound annual growth within its production capacity, marginally falling short of this objective in 2023. While deliveries surged by 38%, production witnessed a 35% uptick.
While this growth trajectory is not inherently problematic, the modest sequential increase in production within 2023 is noteworthy. Delivering 423,000 vehicles in the first quarter translated to a mere 15% production amplification from Q1 to Q4.
Predicting the extent of the company’s deliveries in 2024 proves challenging, with estimates hinting at a figure falling short of 2.7 million, a target set by Tesla. Although the company envisages producing up to 150,000 Cybertrucks, the absence of new vehicle launches or factory expansions to substantiate this growth is conspicuous. With significant downtime recorded at its factories in 2023, potential for amplified production in 2024 is plausible, yet most projections align within the range of 2 million to 2.5 million deliveries, representing substantial but not exceptional growth.
AI’s Salvific Potential
While vehicle deliveries are anticipated to serve as the primary influence on Tesla’s revenue and profitability in 2024, investor attention is equally drawn to developments in artificial intelligence. Proponents like Cathie Wood from Ark Invest envision Tesla’s stock gaining approximately 700% by 2030, propelled by the emergence of robotaxis as its primary revenue source. Furthermore, Tesla’s bipedal autonomous robot, Optimus, carries the potential to pioneer a new category in AI.
Thus far, Tesla has been discreet in divulging details about its AI projects, offering scanty information on the monetization timeline of its developments or the full-scale availability of self-driving features. Nonetheless, advancements on this front could potentially invigorate the stock in 2024.
Will Tesla Reach the Trillion-Dollar Milestone?
Tesla stands poised to augment revenue and profits by 27% or more in 2024. However, for the stock to scale the trillion-dollar summit, Tesla must continue to elicit a premium from investors, necessitating an acceleration beyond analyst projections or substantial strides in AI.
Failing such advancements, the stock will hinge on the same bullish sentiment that propelled it upward in 2023. While this might endure temporarily, sustained long-term progress demands authentic profit upsurge and technological innovation from Tesla at its current valuation.
Where to invest $1,000 right now
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for two decades, Motley Fool Stock Advisor, has more than tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now… and Tesla made the list — but there are 9 other stocks you may be overlooking.
*Stock Advisor returns as of December 18, 2023
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends General Motors and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.