Tesla Stock Predictions: Buy TSLA Ahead Of Thursday Meeting

Tesla Stock Predictions

Tesla Motors Inc. (TSLA) is known as an electric car company. Its stock price had suffered since reaching an all time high in September 2014, falling more than 34% just a month ago. Concerns over the company’s success in China, along with the affordability and marketability of the car, made investors unsure whether the innovative company deserved the high valuation it had at the time.

I Know First Algorithmic Prediction

Since then, the stock price has recovered, as I Know First predicted it would in an article that you can read here. The article argued that the stock price would climb in 2015, as the poor results in China were overblown and would be addressed. Further, demand for the Model S still outweighed supply, which Tesla was addressing with its “gigafactory” being built in Nevada. An announcement coming up on Thursday, where Tesla will introduce a new product that will add value to the company, and the prospect of improved operations in China mean the stock price will continue to climb higher.

tesla stock predictions

New Battery Products

Tesla is widely expected to announce two new battery technologies, a battery for the home and a large-scale utility battery, on Thursday. The batteries that the company uses for its luxury vehicles will be used to power consumers’ homes and businesses, and it is positioned as a front-runner in the emerging market for these technologies. In fact, it has already installed 13 Wal-Mart stores and 300 California homes with the technology as part of a test run.

In the past, this technology has been largely unaffordable for average consumers. The batteries cost anywhere from $10,000 to $15,000. But Tesla can make these products more affordable by having a down payment, probably around $1,500, and have the rest paid for in $15 monthly payments for the next 10 years. The battery will also be easy to install, is quiet, and requires no maintenance. The company is currently building a vast US “gigafactory” in Nevada, which is set to open in 2017. This factory should be able to produce enough batteries for both the automobile business and the new battery segments.

This market is expected to grow rapidly in the coming years, with sales of the batteries reaching $1 billion per year by 2018. At the same time, the prices for these technologies will continue to decrease. The introduction of these batteries will give Tesla a much wider customer base, and will make their addressable market much larger, perhaps by as much as 75%. Additionally, if the automotive growth slows in the future, the stationary battery will provide a cushion to provide growth.

Tesla’s stock price is mostly judged off of future potential, with much of the value in the stock price based off of profits that will come in 2020 and beyond. This new market is expected to be a huge technology by that point, and could add $5.00 to EPS at that time. When considering the current stock price, the meeting on Thursday will send the stock price much higher, as it is another market for the company’s lithium-ion batteries.

Addressing China Sales

The stock price had struggled during the end of 2014 and the beginning of 2015, because China sales were far less than expected, with Tesla only delivering 120 models during the month of January. It is the only country where the Tesla S Model is sold that demand does not outstrip supply. Much of the problem in China was a misconception in China about the availability of recharging stations and a misunderstanding of the Chinese luxury car market.

CEO Elon Musk changed the executive leadership team in the region to try to address the availability of recharging stations for the vehicle and how it would work with customers. More importantly, they have also made options for the vehicle available to make it more desirable among Chinese consumers. Luxury car owners in China like to be chauffeured around in the back seat, something that Tesla did not understand.

The Tesla S Model has a rather small, uncomfortable back seat, making the luxury vehicle a bad fit for that market. Now, Tesla has introduced “executive rear seats” as a $2,000 option. Tesla is able to respond quickly to these kinds of requests because of their direct-sales method. The extra package includes better, leather-wrapped seats, and passengers can use a smartphone to control media, climate, and panoramic roof settings from the back seat.

The company will also sell 100 Tesla Model S85 vehicles to a local taxi company. Wuhan Tricycle Automobile Co., based in the small city Wuhan, China, has already bought ten of the models and will purchase another 90 in the future as part of a trend for taxis and other transportation services to start using electric vehicles. These electric vehicles will be for rich business class users, and should help increase sales in the region by growing exposure in the market and showing that the vehicle is easy and practical to use in the area.

Algorithmic Analysis

I Know First supplies financial services, mainly through stock forecasts via their predictive algorithm. The algorithm incorporates a 15-year database, and utilizes it to predict the flow of money across 2000 markets. The algorithm has more data to forecast within the long term and, naturally, outputs a more accurate predication in that time frame. Having said that, intraday traders, along with short-term players, will also benefit by taking the algorithmic perspective into consideration.

The self-learning algorithm uses artificial intelligence, predictive models based on artificial neural networks, and genetic algorithms to predict money movements within various markets.

The algorithm produces a forecast with a signal and a predictability indicator. The signal is the number in the middle of the box. The predictability is the number at the bottom of the box. At the top, a specific asset is identified. This format is consistent across all predictions. The middle number is indicative of strength and direction, not a price target. The bottom number, the predictability, signifies a confidence level.

The above forecast includes a 3-month prediction from January 27th, 2015. Tesla had a signal strength of 320.52 and a predictability indicator of 0.43. In accordance with the algorithm’s prediction, the stock price increased 8.42% in the predicted time horizon. Having demonstrated an example of when I Know First’s algorithm was able to correctly predict the behavior of Tesla’s stock price in the past, looking at the current forecast can add meaning to the fundamental analysis above.

tesla stock predictions

Tesla is among the top stock picks for the algorithm in both the three-month and one-year forecasts. The incredibly strong signals match the fundamental analysis well. The stock price is set to soar in the coming year, as the company is addressing its only market where demand does not outpace supply, and is adding a whole new market that should add lots of value to shareholders down the line. As a company that is expected to continue growing and start making material profits in 2018, the stock price is currently based off market sentiment, and now is a good time to invest.