How Will Tesla Stock Perform in 2022?

December 30, 2021 07:30

Over the last couple of years, electric vehicle (EV) manufacturer Tesla has spent its fair share of time in the headlines. Whether it’s because of its phenomenal performance in the stock market, or the actions of eccentric CEO Elon Musk, there is usually plenty of material for writers to sink their teeth into.

Whilst its 2021 performance has been fairly muted when compared to 2020 – during which share price increased more than 743% - Tesla stock was up almost 54% for the year when the session closed yesterday, significantly outperforming the S&P 500, which has risen 27.6% year to date.

These remarkable gains have seen Tesla’s market capitalisation surpass $1 trillion, making it the sixth largest company in the world by this measurement and almost four times the size of the next largest car manufacturer, Toyota.

With such impressive past performance, it begs the question, what’s next for Tesla stock? Can it continue to beat the market in 2022?

Well, it’s certainly too soon to tell whether Tesla will outperform the market for the third year running. However, earlier this week, Wall Street analyst Dan Ives reiterated a 12-month price target of $1,400 for Tesla stock, with his most bullish scenario calling for a target of $1,800. Even with the more cautious target, this would represent an increase of almost 29% from yesterday’s closing price. Why the optimism?

Tesla find themselves in the enviable position of manufacturing a product for which demand significantly outstrips supply. This means that one of the largest challenges facing Tesla going forward is its ability to expand production and translate this high demand into higher sales. Can Tesla put themselves in a position to take better advantage of this demand next year? Analyst Ives seems to think so.

In 2020, Tesla delivered almost 500,000 EVs and, subsequently, set themselves a target of delivering 750,000 EVs this year. By the end of Q3, they found themselves around 122,500 vehicles short of this target and, whilst official Q4 sales figures are not yet available, analysts forecast that Tesla will significantly exceed their goal.

Ives believes that this production capacity is set to further increase next year and estimates the company should have the capacity to produce 2 million EVs a year by the end of 2022. A lot of this predicted growth in production is expected to be covered by new factories opening in Berlin and Texas but will depend on how smoothly life starts at both facilities.

If Tesla is able to significantly increase production, as Ives predicts, then Tesla shares may be set for another impressive year in 2022. However, if we have learnt anything over the past two years, it’s that the world is unpredictable, and, therefore, potential investors should weigh up all the evidence themselves before making any investment decisions.

Depicted: Admirals MetaTrader 5 – Tesla Daily Chart. Date Range: 30 April 2021 – 29 December 2021. Date Captured: 30 December 2021. Past performance is not a reliable indicator of future results.

 

Depicted: Admirals MetaTrader 5 – Tesla Weekly Chart. Date Range: 14 June 2015 – 29 December 2021. Date Captured: 30 December 2021. Past performance is not a reliable indicator of future results.

 

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Roberto Rivero
Roberto Rivero Financial Writer, Admirals, London

Roberto spent 11 years designing trading and decision-making systems for traders and fund managers and a further 13 years at S&P, working with professional investors. He has a BSc in Economics and an MBA and has been an active investor since the mid-1990s