Tesla (NASDAQ:TSLA) will offer investors a thrilling and chilling ride next year with sky-high volatility that could first push the stock up to $400 in early 2018 and land it abruptly at $200 toward the end of the year, the most widely followed analyst on Tesla said in a note to clients on Tuesday.
Morgan Stanley’s Adam Jonas expects Tesla’s stock performance to be basically divided into two halves next year. First the stock is expected to soar from its current price of $308 to some $400, due to the easing of the production bottlenecks that would ensure much needed strong cash flow. But later in the year, “mounting concerns over the sustainability of the competitive moat” could crash the stock to $200, Jonas wrote in the note ‘Tesla 2018: $400 then $200?’, as carried by CNBC.
“From a shorter-term trading perspective, we anticipate Tesla's stock price may reach highs in the range of $400 or more over the next few months before facing some more serious headwinds later in the year,” the analyst says.
Jonas kept his “equal weight” rating and the $379 price target on Tesla, which represents a 23-percent upside to Tesla’s current share price.
In the coming weeks, Tesla is expected to overcome battery production issues, which could boost the stock. But later next year, a flurry of more EV and autonomous vehicle announcements from Tesla’s direct competitors are expected to cloud the investor optimism, according to Jonas.
Last week, TD Ameritrade chief market strategist JJ Kinahan said that people are investing in Tesla because they are fans of Elon Musk, and even though the company continues to burn cash, the stock still holds great appeal, especially among younger investors. Related: Energy Majors Hit Hard By Climate Regulations
‘It really is amazing. I think it’s definitely for Millennials, it definitely holds appeal. There’s no question about it,” Kinahan told The Street.
Musk charmed the crowd last week with the unveiling of the electric Semi truck, and a surprise all-new Roadster billed as “the fastest production car ever.” Analysts started to crunch the numbers and try to predict how Tesla would deliver on its promises.
Gene Munster of Loup Ventures continues to be very bullish on Tesla, and says that with the truck unveiling, “an untapped opportunity in trucking should continue to stoke investor’s optimism for the next three years. This optimism is critical to allowing the company to continue to tap the debt and equity markets for the capital needed to enable Tesla to advance its mission of accelerating the globe’s adoption of renewable energy, disrupting the auto and energy industries along the way.”
By Tsvetana Paraskova for Oilprice.com
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