How 2016 Can Dramatically Shift Tesla Stock
Tesla Motors Inc (NASDAQ:TSLA) stock could jump as high as 50% if the tech company can meet its production targets, which has proven difficult in the past.
According to Forbes, Tesla stock is estimated to derive 45% of its valuation from sales of the mass-market “Model 3,” set to be the most affordable Tesla yet. When the vehicle was first displayed to the public, the company couldn’t keep up with its phone lines buzzing with hungry customers. It received 100,000 orders, more units than Tesla has ever sold in a single year for any of its other models so far. (Source: “Tesla Can Boost Its Stock Price By 50% If It Meets Its Production Targets,” Forbes, November 21, 2016.)
Those 100,000 orders ballooned five-fold, and Tesla had to announce that it was entirely booked for all of its production schedule for the first year of Model 3 sales.
But the question now lies in whether Tesla can hit those promised numbers. The company has rarely been able to produce sufficient units to meet demand in the past. Tesla targeted 35,000 to 55,000 units in the past two years, but missed on both targets, which does not exactly build confidence as the company sets out to meet some of its highest unit orders ever in 2016.
According to Trefis, an analytics solutions provider, Tesla will only just hit its projected mark of about 80,000 to 90,000 units in 2016, and therefore predicts that Tesla will not be able to meet the numbers it has laid out.
Which brings us to the huge stakes involved for Tesla stock. According to the Trefis price estimates, Tesla stock could be in for a 74-point swing depending on how well it can perform on those production numbers. If it underperforms and fails to meet these numbers, Tesla stock would fall by as much as 30%. But, if the company can hit or even exceed its unit marks, then Trefis believes Tesla stock value could rise as much as 44.3%.
Which is to say, Tesla stock has a big year coming up, and a lot of eyes will be watching to see if the tech company will be able to ship the requisite units and soar or fall short and take a substantial share value hit.