- Model X sales and the Powerwall could become big revenue drivers.
- Falling battery prices could cut losses.
- Tesla valuations could limit upside in 2016, after a somewhat flat 2015.
Tesla stock is almost always in the news, thanks to its premium electric vehicles and a host of other innovations. More recently, Tesla (NASDAQ:TSLA) has been widely covered on Amigobulls, after its announcement to aggressively price the Model X at $80,000. Alex Xu takes a look at all the key happenings for Tesla in 2015 and opines on what to expect in 2016. While he predicts a good year for the company in general, he thinks, there might not be as much upside for Tesla's stock price.
Tesla's stock price hasn't moved too much in 2015, and it's now up by a little over 3.5% for the year so far, marginally outperforming the broad based S&P 500 index. However, Alex thinks that things are looking very good for Tesla in 2016.
Tesla's big launch of the Model X has received a good response, with over 30,000 bookings. Alex suggests that this demand will only be fulfilled by late 2016. Tesla's gigafactory completion should lift sentiment as well, given that the company will be able to ramp up production of cells significantly starting from 2017. It's also expected to bring down costs significantly. However, there's a good argument on Motley Fool, on how that could go the other way for Tesla.
The other key factor is the Powerwall, Tesla's home battery, which has seen great interest and demand form consumers. After being launched in April, priced at $3000, the Powerwall was sold out until mid-next year. Tesla has managed to sell 50,000 units of the Powerwall within the first few weeks of the launch. So, that's one product the company could definitely leverage consumer interest in.
Tesla's earnings per share have declined consistently, due in part to the additional spends on R&D. However, revenue has grown at a good pace. If all proceeds as planned, falling battery costs should help Tesla either price their cars more aggressively, or focus on expanding profit margins. At large, 2016 looks good for Tesla. However, given Tesla's valuations, at 120X forward earnings and 8 times sales, could limit the upside potential of the stock.
All things considered, Alex thinks Tesla is a hold for now. What about you? For more details, watch the video.