When I’ve looked at the Tesla (NASDAQ: TSLA) stock price in the past, I’ve usually had at least a gut feel for where it might go next.
In 2021, when its price-to-earnings (P/E) ratio was rattling around the 200 mark, I felt a bit twitchy. Still, it had been over 1,000 in the early days of it turning a profit.
When the stock had deflated by early 2023, I felt it was down too far and it looked like a buy.
But right now, after some half-hearted ups and downs?
Forecasts say…
The brokers’ consensus doesn’t offer much daylight. It’s pretty much bang on halfway between Buy and Sell.
And the experts have an average price target of $181 on the stock. With it at $177 at the time of writing, that doesn’t help much.
What does seem clear, though, is that Tesla in in a transition phase. Adam Jonas, analyst at Morgan Stanley, recently said that Tesla is facing “the most profound realignment of priorities and strategy in the company’s history.“
Earnings forecasts, meanwhile, have been pegged lower and lower over the past couple of years, with Q1 2024 figures below expectations. But forecasts show growth resuming from 2025.
Musk and Buffett
Berkshire Hathaway guru Warren Buffett has been selling some Apple stock, though that’s partly for tax benefits. And it seems Elon Musk thinks Tesla is the ideal home for the cash.
Responding to a post on X suggesting just that, Musk replied that “it’s an obvious move.“
But would it make sense for a long-term value investor to make a move like that? Well, these two folk could hardly be more different.
Musk has an impressive track record as an innovator. But he doesn’t really instil the same sense of calm, steady leadership that Warren Buffett does. Not to me, at least.
Uncertainty
Musk himself is personally behind the biggest uncertainy right now. It’s Tesla’s planned move to Texas and Musk’s hoped-for bumper pay deal.
To reincorporate the company in a new home will need approval from a majority of shareholders, with non-votes effectively counting as opposes. So it’s far from a done deal.
What Musk will do if he doesn’t get his way, we can only guess at. The vote deadline is 12 June, and I won’t want to miss the next day’s headlines.
So, what does it all mean for those of us considering Tesla stock today?
Tempting valuation
The prospect of a P/E of around 40 based on 2026 forecasts tempts me. If we really are at the start of Tesla’s next growth phase, I reckon that could turn out to be cheap.
The bigger picture, though, is far from clear. Chinese rivals are making very good products at lower prices. Trade barriers should help Tesla on that score, mind.
But when it comes to investing in company leaders, the older I get the more I’m looking for the Buffetts of this world than the Musks.
Can I write about Elon Musk without using the adjective ‘mercurial’? I almost did.
