Tesla 2020 Vehicle Deliveries Top Estimates, But Shy of Elon Musk’s Target

California-based electric vehicle and clean energy company Tesla Inc said on Saturday it delivered higher-than-expected 499,550 vehicles in 2020 but fall short of CEO Elon Musk’s target of 500,000.

The manufacturer of high-performance electric vehicles beats the market consensus of 481,261 vehicles deliveries.

“We don’t see the 4Q20 results moving the bulls or the bears and expect a fierce debate on the stock to continue. All eyes will be on margins given 180,570 deliveries vs. 210,000 capacity and price cuts during the quarter, regulatory credits and commentary on full self-driving (FSD) when Tesla reports results in the coming weeks,” said Jeffrey Osborne, equity analyst at Cowen and Company.

“We are continuing to take a longer-term look at valuation. Now that the electrified mobility transition is well underway, investors are willing to look beyond typical 1- to 2-year multiples, which had been our prior approach in valuing Tesla (TSLA) shares. Our $380 price target is based off of a ~35x EBITDA multiple on our 2025 EBITDA estimate of $12.2bn. Given Tesla’s steady margin performance and industry leadership in both EV market share as well as electrical efficiency, leveraging in-house produced motors, SiC based inverters, and an innovative HVAC compressor system, we believe a “tech like” multiple is warranted. Note we are giving the company no credit for likely future vehicles such as a hatchback for the European market based off the Model 3 platform, larger SUVs, and potentially a delivery an. In addition, we are not modeling any success in full self-driving L4/5 capability through the duration of our model as we remain skeptical,” Osborne added.

Tesla stocks soared more than 700% last year to close December 31 at a record $705.67. In 2020, the electric vehicle manufacturer reported five successive quarterly profits and was included in the S&P 500 index last month.

Tesla Stock Price Forecast

Twenty-five analysts who offered stock ratings for Tesla in the last three months forecast the average price in 12 months at $457.83 with a high forecast of $788.00 and a low forecast of $40.00. The average price target represents a -35.12% decrease from the last price of $705.67. From those 25 equity analysts, seven rated “Buy”, 11 rated “Hold” and seven rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $540 with a high of $1,068 under a bull scenario and $250 under the worst-case scenario. The firm currently has an “Overweight” rating on the electric vehicle producer’s stock.

Several other analysts have also recently commented on the stock. Wedbush increased their target price on Tesla to $560 from $500 and gave the stock a “neutral” rating. Deutsche Bank raised to a “buy” rating from a “hold” rating and increased their target price to $500 from $400 in September. Cfra lowered Tesla to a “hold” rating from a “strong-buy” rating.

Analyst Comments

“A double-fly-wheel. We believe Tesla can leverage its cost leadership in EVs to aggressively expand its user base… over time generating a higher % of revenue from recurring/high-margin services revenue. Services drives the upside. We forecast Tesla’s network services EBITDA as a % of total TSLA EBITDA to reach 12% by 2025, ~19% by 2030 and ~38% by 2040. Tesla Service revenue includes automated driving, infotainment, upgrades, supercharging, maintenance, telematics, etc,” noted Adam Jonas, equity analyst at Morgan Stanley.

“Valuation supportive vs. tech. Including Tesla Network Services, Energy & Insurance to our core auto forecasts, at $540 Tesla trades at 24x EV/EBITDA in 2025 and 5x 2025 sales. Reasonable vs. software & tech hardware comps.”