Tesla Stock Forecast for 2017
The article was written by Blair Goldenberg, a Financial Analyst at I Know First, and enrolled in a Masters of Finance at Colorado State University.
Tesla Stock Forecast
“Let the future tell the truth, and evaluate each one according to his work and accomplishments. The present is theirs; the future, for which I have really worked, is mine” ― Nikola Tesla
- Tesla Forecast for 2017
- Performance and earnings review
- I Know First Algorithmic Bullish Forecast For TSLA
Tesla Motors, Inc. designs, develops, manufactures, and sells electric vehicles and stationary energy storage products in the United States, China, Norway, and internationally. It primarily offers sedans and sport utility vehicles. The company also offers electric vehicle powertrain components and systems to other manufacturers. It sells its products through a network of Tesla stores and galleries, as well as through Internet. In addition, the company designs, manufactures, installs, monitors, maintains, leases, and sells solar energy systems to government, residential, and commercial customers; and sells electricity generated by solar energy systems to customers. Tesla Motors, Inc. was founded in 2003 and is headquartered in Palo Alto, California.
Last year, Tesla (TSLA) didn’t do as well as you would think, being that Tesla is a household name when referring to the future of the electric vehicle. The reason it performed so poorly was because of an 11% drop in February of 2016 due to a decrease in gas prices as well as doubtful investors stemming from Tesla’s long-term goals rather than immediate growth. At that point, the share price dropped from $223.41 on January 4, 2016 to $143.67 on February 10, 2016. Since this drop in share price, TSLA has been quite volatile as it shot up in the next two months to over $265 per share and back down below $200 per share in early September. However, TSLA closed the year at $213.69 and has been steadily going up since. TSLA now stands at $229.01 before open on January 9, 2017. This is partially due to the Q3 earnings Tesla released in October. Their Q3 was only their second quarter where the company came out profitable. They did so well in Q3 that it exceeded any expectations and predictions. In Q3, Tesla earned $0.71 per share on $2.3 billion in revenue. Expected performance by analysts for Tesla was a loss of $0.54 on a $1.98 billion revenue. Their increase in revenue was said to be because of “new product launches, increased store efficiency, and new store openings as some of the major factors driving third-quarter results” Retrieved from CNBC. A few weeks before the Q3 report was released, Tesla announced that they reached record deliveries and production numbers on vehicles that jumped 70% on deliveries and 37% on production from Q2. By the end of September of 2016, Tesla reported $3.1 billion in liquidity, investing $248 million in production, construction and infrastructure growth from the previous quarter. Also in Q3, Tesla paid off $600 million in debt which offered the company $300 million in vehicle leasing programs.
This year, TSLA will either plummet or succeed with their new Tesla Model 3. The new model will be released later this year and will be the most affordable model that the company has ever released. The new model will be priced at $35,000 including tax incentives. The fact that Tesla is releasing a new model that is cost efficient for the regular consumer shows that the company has grown and adapted from its exorbitant previous prices on older models.
This new model will be released at the perfect time as the OPEC deal, cutting oil production all over the world, will increase gas prices tremendously at a time when people are already trying to turn away from gas guzzling vehicles. This creates the perfect storm for the Model 3 as consumers get rid of their older gas vehicles and move toward the affordable and highly sought after electric Tesla’s.
While all of that may sound promising, there are drawbacks. Tesla has had a hard time producing enough units on time, which will put a damper on the expected sales of the cars. Also, the $35,000 price tag may not be feasible and therefore the company may not be able to actually maintain it. Additionally, the car is being released among the shift in power in the United States, with new leadership being less than favorable toward green energy. However, these factors may not be enough to put a damper on Tesla’s growth this year.
Another new release this year is their autopilot software. Released on Mondy was the software enabling autopilot to 1,000 Tesla owners. The rest of the new Tesla’s will also have the software but it will be not be enabled until the end of the week if the test run on the 1,000 vehicles is a success. New features that the software update will brandish include enhancements on radar sensors that will allow the system to see through rain, fog, dust, and will be able to detect cars in front of it, there are also 12 ultrasonic sensors that can detect hard or soft objects at twice the distance as previously. Also, Tesla will be using Nvidia’s Titan GPU which will offer users 40 times more computing power compared to the old system. The autopilot system will also match speeds of traffic around the vehicle, change lanes without driver interference, merge onto the freeway, and it will be able to park itself.
Tesla and SolarCity have effectively merged as well, and now that they have, Tesla has partnered with Panasonic in order to manufacture photovoltaic or PV cells. These cells will be used in order to make solar panel roof tiles, rather than the more common panels that are generally seen on top of roofs or in solar farms.
Tesla is a company that many only dream to become, but why are they so successful at what they do? Tesla’s competitive advantages are unmatched in the electric vehicle sector and now, due to the solar tiles they will be producing with Panasonic, they are creating a massive upgrade in the solar panel industry. Tesla has many other advantages that position the company way above the rest, such as their batteries, abundance of their supercharging stations, software that is extremely advanced compared to the competition, an amazing reputation in the community. Tesla’s batteries are not only cheaper to produce, but they are also better than the more expensive batteries in other electric vehicles. Not only is it better, it continues to be better than the rest as Tesla continually makes upgrades to their existing battery. Along with the battery, comes charging stations. Tesla doesn’t just have charging stations, they have extremely quick supercharging stations that don’t cost money to use because the price of the electricity is priced into the car. Another advantage, Tesla’s software, is updated as often as your phone or tablet. The software is also being produced by Nvidia, one of the top GPU companies that utilize advanced artificial intelligence. And lastly, Tesla’s reputation completely disassembles any competitors. The company aims to make their customers happy as well as comfortable. If you’ve ever noticed, Tesla’s stores are located within malls in a showroom fashion. It is not a car lot and there aren’t any car salesman pestering customers. It’s a relaxed environment that can be compared to shopping for clothing. In this sense, Tesla is the perfect car nondealership.
I Know First Algorithmic Bullish Forecast For TSLA
I Know First currently maintains a bullish stance on TSLA with signal strength 46.43 and predictability 0.65 for the 1-year forecast.
In the past I Know First was also bullish on TSLA. This bullish forecast on TSLA was sent to current I Know First subscribers on January 1, 2016, where TSLA had a signal of 25.00 and a predictability of 0.18. TSLA showed returns of 8.23% for one year.
I Know First Algorithm Heatmap Explanation
The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.
Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm, allowing the user to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.
Tesla may not have done its best last year, but this year is a new beginning with promising possibilities. The car will be more affordable for the average consumer, driving customers to buy the new model, and the new autopilot feature will intrigue many new buyers. This year will be the year that Tesla moves forward.