California-based high-performance electric vehicles manufacturer Tesla shares slumped about 5% ahead of the much-anticipated debut on the S&P 500 as fast-spreading newly mutated coronavirus in the UK dampened hopes of a quick recovery for the global economy.
Tesla shares slumped about 5% to $660.70 in pre-market trading on Monday. However, the stock is up about 700% so far this year.
“According to Silverblatt, Tesla’s addition to the S&P 500 led index-tracking funds to buy $90.3 billion of shares by the end of Friday’s session so that their portfolios reflected the index. The change is effective prior to the open of trading on Monday, S&P said earlier in December, and Tesla is replacing Apartment Investment and Management Co,” Reuters reported.
“Silverblatt said that for every $11.11 Tesla moves, the S&P 500 changes 1 point, while the S&P’s 2021 price/earnings ratio will rise to 22.6 from 22.3. Silverblatt added that the dividend yield for the S&P after Tesla’s inclusion would fall to 1.53% from 1.56%,” Reuters added.
Tesla Stock Price Forecast
Twenty-five analysts who offered stock ratings for Tesla in the last 3 months forecast the average price in 12 months at $417.76 with a high forecast of $750.00 and a low forecast of $60.00. The average price target represents a -36.54% decrease from the last price of $658.34. From those 25 equity analysts, seven rated “Buy”, eleven rated “Hold” and even rated “Sell”, according to Tipranks.
In November, 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. Tesla had its target price increased by Barclays from $125 to $230 on Thursday. Wedbush raised the stock price forecast to $715 from $560.
“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,” Jonas added.