Published on June 9th, 2019 | by Chanan Bos0
Graph Of Tesla Analyst Stock Price Targets Raises Questions, Provides Two Takeaways
June 9th, 2019 by Chanan Bos
Today, we have some interesting information to share with you regarding Tesla analyst price targets for TSLA. Before we get there, however, a bit of backstory: About a month ago, we livestreamed Tesla’s quarterly investor call on YouTube, adding special features like being able to see who was asking questions and what the questions were (written out in text). We even showed a live TSLA stock ticker.
For the next quarter, we want to go a step further. When an analysis firm like Barclays or Bank of America is asking a question, we hope to show the analyst’s latest TSLA price target (or maybe even a trend-line graph) so that we can directly show people whether it’s a bull or a bear asking the (usually loaded) question.
Just in case you forgot how important an analyst’s price target can be, remember that one analyst (Adam Jonas from Morgan Stanley, as seen in the image above) recently said TSLA stock could go to $10 per share (or go up to $391 per share) within the coming year. Just about every major news outlet decided to shout the $10/share part from every rooftop even though it is highly implausible. Tesla’s stock price dove after the announcement, which didn’t actually change Morgan Stanley’s overall price target for TSLA, and the media’s coverage of it.
In other words, yes, much attention is put on these — just don’t forget the influence the media plays, especially when cherry picking dramatic numbers. However, it’s important to remember that these are, very simply, guesses — the share prices analysts believe the stock should (or could) be at in a certain period of time.
If you were listening to the last conference call live, it might have been useful to see his historical TSLA price targets for some context. So, we went out hunting for data. Usually, the data are put in the form of a chart of log entries where you see that a brokerage has changed its price target and how it currently rates the stock (with advice of buy, sell, or hold). Even from those tables you can notice something strange. Some of the largest names in this line of work, like Bank of America and Barclays, have very low targets (like $150 or $250), while others, like Oppenheimer and Berenberg, have price targets of $437 or even $500. When you look at most stocks, there is also some disagreement on price targets, but the differences are often not so dramatic. Before we get to the main chart, here is one for Alphabet/Google as a base reference:
There is basically a very easy-to-see trend line and consensus (with a margin of error and a few outliers) of where the company is going. Approximately $300 separate the high & low price targets at the beginning (left side) of the graph, while the range from high to low is $250 at the end (ride side) of the graph.
With Tesla, the range in targets is much wider (a range of approximately $470 at the end,), and analysts don’t seem to be following any real trend as a group. Please, have a look:
By the way, if you want to look at differences in expected relative (%) change in the stock price based on these various price targets, the difference between Tesla and Google (and many other companies) is much more dramatic.
What this provides, in summary, is a note of caution to anyone who has ever heard anything good or bad about the company from Wall Street analysts. Also, it should perhaps concern journalists more than it does. The financial press constantly writes about various analysts and their changes in Tesla price targets, and even invites them on TV news shows to “explain” what is currently happening with Tesla. However, what is obviously clear from this chart is that opinions are all over the map. A few of them may be right, but that means many others will be wrong, very wrong. Basically, no matter what anyone tells you, all of the analysts are simply guessing.
But what the media should perhaps keep in mind more, and note to readers/viewers, is that share price targets can be tools for market manipulation — more than any truly helpful information for potential investors. When changes to price targets hit the news, the journalist shouldn’t just ask the analyst, “So, you changed your price target — what has changed with Tesla that justifies this action?” The journalist should also ask something along the lines of, “So, you changed your price target — to what extent do you hope this market manipulation will help you?”
Also gathered from the data collection, here’s a thing you probably didn’t know or realize about the stock: there are at least 13 brokerages that have their price target above what TSLA stock has ever been at (which was $387.46), with those price targets ranging between $394 and $530. You probably wouldn’t realize that if only watching CNBC or reading Tesla coverage in the biggest financial/business media outlets.
Personally, I believe that Tesla is playing a very important role in our society, disrupting and pushing the entire automotive and energy industry into the future. With new technology, leadership in autonomy, and previously unseen economies of scale, I think it has a good chance (or at the very very least some chance) of becoming the largest vehicle manufacturer in the world and bankrupting a lot of the competition in the next decade or two. If the Tesla stock price was actually a measure of how Tesla has been doing and what it now seems it could do, it seems the stock price would be sky high. If you look at what every single human being in the world, including Elon Musk himself, thought was possible in 2007 and compare that to where Tesla is now, what kind of price can you put on Tesla routinely achieving things that experts have supposed were impossible? What kind of trend do you think a company is on when they manage to do the impossible time and again? Some of these supposedly impossible tasks include but are not limited to:
- Make an electric car desirable and sexy (rather than a glorified golf cart)
- Making a mass market electric vehicle profitably (Model S)
- Make a premium low-cost electric car profitably (Model 3)
- Create a non-geofenced autonomous vehicle at a bargain price and earn billions from a fleet of these (something that will happened within the next 2–8 years)
Clearly, more than a dozen analysts think Tesla will continue to have strong success and the stock price will rise as a result, but the ones with the most negative opinions seem to get the most attention in the press, which drives down the stock price and surely drives down price targets across the board.
To round this all up, there are basically two clear takeaways. First of all, there is wide variation in TSLA price targets, which basically means there’s a lot of guessing involved. Secondly, the analysts with the most negative forecasts seem to be featured in the media much more than others. Why is that? Does the media realize that? Does the media realize this is warping opinions? Does the media search out the negative forecasts for some reason or simply have Tesla bears ringing its doorbell much more? If the former, why? If the latter, do these major media organizations understand or question why?
We’ll spend more time considering this info. Chime in with your own thoughts, as well.
Our Q1 conference call video can be found at CleanTechnica.TV. Also on our channel are some original videos from our exclusive tour of Tesla’s Fremont factory, and we have new episodes coming out soon! As for the Q2 Tesla shareholder conference call, we have some very exciting news about that coming up, so stay tuned to hear more.