The recent massive sell-off in stocks is gaining momentum, with the stock market experiencing a significant fall today. Shares of electric car manufacturing giant Tesla (TSLA), which surpassed a $1 trillion valuation in the last year, have also witnessed a reversal of sorts in 2022. However, some analysts are very optimistic about the company’s earnings for the next few years and predict a turnaround for Tesla.
Investors are wondering whether they should take this opportunity to load up on TSLA shares, as Elon Musk has defied long odds and consistently beaten expectations.
So, is Tesla a good buy now? Let’s see.
TESLA STOCK: AN OVERVIEW
Strong fundamentals would resuscitate Tesla stock, making TSLA one of the top stocks to invest in.
Tesla is a one-of-a-kind US electric vehicle and clean energy company led by visionary CEO Elon Musk. As a company, Tesla has reaped massive profits and popularity since its inception. 2021 has been a record year for Tesla, delivering nearly 936,000 electric vehicles, setting a record. Its latest earnings report suggests that the company also has the best operating margins among electric vehicle (EV) manufacturers. Indeed, the company closed the year with a solid 83% year-on-year growth in production with almost 1 million cars. With its record number of EVs, management also expects delivery to grow at an average annual rate of 50% in the coming years.
In addition, after spending more than $11 billion in capital expenditures, Tesla also delivered its second profitable year under generally accepted accounting principles (GAAP) and a free cash flow of $5 billion.
Therefore, Tesla has been an investor favourite over the years, as it is hard to find a stock that efficiently checks all the boxes; attractive growth, a solid history of consistent wins, disruption, decarbonisation, quality and many more. These solid fundamentals will help strengthen Tesla’s position as one of the best stocks to buy now.
THE HUGE POTENTIAL OF TESLA STOCK
Tesla plans to focus on increasing production volumes of existing models at its existing and new factories, increasing TSLA’s investment ratio.
TSLA appears to be a good buy despite the current market downturn. In 2022, Tesla has expanded its global reach and production rates. The company received approval to start commercial production at its new factory near Berlin. It can produce up to 500,000 vehicles per year. The plant will also produce most of Tesla’s vehicles destined for European customers, starting with the Model Y crossover SUV.
In addition, Tesla’s rising earnings estimates and subsequent upgraded rating show a big improvement in the company’s underlying business. This would be a significant boost for the stock, making TSLA a potential investment option.
IS TSLA A GOOD BUY NOW?
Tesla aims to continue to deliver successful growth for the foreseeable future, making the stock a good buy.
Tesla’s relentless focus on reducing costs through new batteries, product localisation, scale and efficiency continues to be strong quarter after quarter. With this year’s expansion and improvements, this will accelerate further. Although there are multiple competitors in the electric vehicle space, Tesla will continue to dominate market share with its high-end technology and professional team.
Moreover, with the massive expansion of its manufacturing capabilities, TSLA stock looks to be a profitable buy now for future returns. Musk also wants to build 20 million electric vehicles per year over the next decade, which will boost TSLA’s share price enormously. This is more than double the current output of other auto manufacturing giants, and the team is working dedicatedly to achieve this goal.
However, one of the most encouraging aspects of the current market correction in Tesla is that long-term investors have the option to buy TSLA for a relatively affordable price.
THE BOTTOM LINE
With Musk at the helm of the company and a strong team, Tesla’s sales would grow comfortably above 50% by 2022 despite supply chain issues. Thanks to its new factories and current plants boosting production, the share price would hit new highs this year, making Tesla a good buy now for future returns.