Will Model 3 Deliveries Drive Tesla Stock in 2017?



Analysts’ recommendations

According to the latest data compiled by Reuters, 27% of analysts covering Tesla Motors (TSLA) gave the stock “buy” recommendations, while 45% gave “hold” recommendations. Only six analysts among the 22 covering the company’s stock gave “sell” recommendations.

On January 16, 2017, Tesla’s consensus 12-month target price was $238.75 with just 0.4% upside potential from its market price of $237.75.

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Tesla Model 3

Tesla’s Model 3 was unveiled on March 31, 2016, by CEO Elon Musk. It could be a game changer for the company. Model 3 deliveries will likely start in 2H17. Tesla plans to start mass-producing Model 3 on a larger scale in 2018.

In October last year, Tesla announced that all of its Model 3 vehicles will include the hardware required for full vehicle automation. It could make Model 3 stand out from the competition.

Note that mainstream automakers (XLY) including General Motors (GM), Ford (F), and Fiat Chrysler (FCAU) also accelerated their electric vehicle development in 2016.

Read An Investor’s Guide to Tesla Motors to learn more about the company’s marketing strategy.

Challenges ahead

Last year, Tesla acquired SolarCity (SCTY)—a solar energy products and services provider in the US. After the acquisition, the company wants to offer a variety of sustainable energy-based products under one brand.

In 3Q16, Tesla demonstrated solid positive growth on all fronts. It became cash-flow positive in the third quarter this year. Tesla’s ability to sustain the growth will be key for its future growth estimates to remain high and drive its stock prices in 2017. To achieve its growth target, Tesla needs to stay focused on the timely deliveries of Model 3 in 2017. A delay in Model 3’s arrival could hurt its growth estimates and stock going forward.

In the next part, we’ll discuss how analysts rate General Motors stock in 2017.


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