Tesla Stock Price Forecast September 2021 – Time to Buy TSLA Stock?

Tesla (TSLA) stock fell almost 4% yesterday amid the broader markets sell-off. However, while the S&P 500 is still up in double digits in the year, Tesla stock trades almost flat for the year.

After the splendid rally in EV (electric vehicle) stocks in 2020 where TSLA stock rose 740% while NIO rose over 1,100%. EV stocks have looked weak in 2021. What’s the forecast for Tesla stock in September and is the recent weakness a buying opportunity?

Tesla stock technical analysis

Let’s begin by looking at the technical analysis for TSLA stock. Currently, the Elon Musk-run EV company is mixed on the charts. While it trades above the long-term moving averages like the 50-day, 100-day, and 200-day SMA (simple moving average), it has fallen below the short-term moving averages including the 10-day and 20-day SMA. Its MACD (moving average convergence divergence) gives a sell signal. However, the 14-day RSI (relative strength index) is a neutral indicator.

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TSLA stock price recent developments

Tesla seldom has had a good rapport with regulators. The company has had trouble with the NHTSA (National Highway Traffic Safety Administration) in the past also. Musk has also been critical of the US SEC which he prefers to call the short seller enrichment corporation.

Now, the company is again getting into trouble with the regulators over the FSD (full self-driving option). NHTSA head Jennifer Homendy finds the name “FSD” problematic and calls it “misleading and irresponsible.” To be sure, on its part, Tesla maintains that the FSD is not fully autonomous and drivers should keep their hands on the steering at all times. However, there have been instances when Tesla cars have crashed while on FSD mode. According to Homendy, the nomenclature “has clearly misled numerous people to misuse and abuse technology.”

Tesla intends to launch a beta version of the FSD which the regulator is not too happy with. According to Homendy “Basic safety issues have to be addressed before they’re then expanding it to other city streets and other areas,”

Tesla stock price long-term forecast

Here it is worth noting that the FSD and other software capabilities of Tesla are key for its long-term success. Currently, the company charges $10,000 for the FSD option but Musk expects prices to eventually rise to $100,000 over the long term. Musk has previously said that its revenues from FSD and yet-to-be-launched robotaxis could be similar to the automotive revenues.

Musk cited a hypothetical example assuming annual revenues of $60 billion. During the fourth quarter 2020 earnings call Musk said, “So — and the pace you get 20 PE on that, it’s like $1 trillion and the company is still in high-growth mode. So, I think there is a way to sort of like justify the valuation of the company where it is using just the cars and nothing else, the cars with FSD.” He added, “And I suspect at least some number of investors are taking that approach.”

Tesla long-term delivery guidance

Also, the company expects its deliveries to rise at a CAGR of over 50% over the long term. Tesla is investing in new plants and the Berlin Gigafactory is expected to come online this year. The Texas Gigafactory would also soon come online. Musk has also floated the idea of setting up plants in Russia. That said, Russia hasn’t been a profitable market for Ford and General Motors and both of them have exited the country.

Last year, Musk had also said that Tesla Energy revenues would be similar to that of automotive revenues in the long term. Currently, revenues from the Energy business don’t even contribute 10% to the total revenues.

TSLA stock price forecast

Wall Street is not as split on any other stock as it is on TSLA. Of the 40 analysts covering the stock, only 17 have a buy rating while 14 rate them as a hold. The remaining nine analysts rate the stock as a sell. Its median target price of $766 is a premium of 4.6%. However, there is a big dispersion in analysts’ target prices and they range between $67 to $1,591. Some like Cathie Wood see the stock rising to $3,000 by 2023. Gene Munster expects Tesla’s market cap to eventually rise to $2 trillion.

How analysts view TSLA stock

Earlier this month, Wedbush Securities, which is among the biggest Tesla bulls reiterated its outperform rating on the stock. “As this green tidal wave hits its next phase globally, we believe the Tesla EV demand story is just starting to play out despite some lingering China headwinds which are starting to reverse course heading into year-end,” it said in its note. The brokerage sees EV demand “inflecting” next year and finds Tesla as the biggest beneficiary.

Next month, Tesla would release its third-quarter delivery report. The report could impact TSLA stock price and would also offer insights on how much the chip supply situation is hurting the company. Chinese EV companies NIO and Li Auto have already scaled back their third-quarter guidance amid the chip supply situation.

TSLA stock price valuation

Valuing Tesla has been a conundrum for analysts and it also explains the divergence in analyst opinion. Tesla stock has a market capitalization of $722 billion which is over twice that of Toyota, the second most valuable automaker. At its peak, Tesla’s market cap exceeded that of all leading automakers including Toyota, Volkswagen, General Motors, and Ford put together.

Currently, TSLA trades at an NTM (next-12 months) enterprise value to sales multiple of 12.2x. Now, while the valuations would appear high for a value investor, EV enthusiasts have been grabbing Tesla stock anticipating a massive increase in EV adoption. Tesla’s valuation mainly comes from the software part of the business which would help it expand its margins significantly. Currently, all of the company’s profits have been coming from the sales of carbon credit.

Should I buy Tesla stock?

If you believe in Tesla’s software ability and expect its sales to rise at a steep pace despite growing competition from legacy automakers, you might find the stock attractive. Also, unlike other EV names, TSLA is now a sustainably profitable company, even as the margins are quite low. That said, while TSLA stock might appear overvalued to many, it has created a lot of wealth for investors. If the company can deliver on the promises, it could deliver good returns in the future also.

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