Tesla Stocks Projected to Reach Record Highs Despite Earnings Cut - Gary Black
On Wednesday, Gary Black from The Future Fund LLC projected that Tesla Inc. (NASDAQ: TSLA) could surpass its all-time high share price of $410 recorded in November 2021, and this could happen even today. This anticipated milestone comes despite a significant 63% decline in adjusted earnings forecasts for Tesla's fiscal year 2024 compared to 2022. Currently, Tesla's price-to-earnings (P/E) ratio for 2025 stands at 122 times, still lower than the forward-looking annual P/E ratio of 145 times in November 2021.
The Future Fund LLC emphasized that Tesla's previous peak was driven by expectations of a 50% volume growth supported by an increase in global electric vehicle (EV) adoption and the popularity of the Model Y. However, CEO Elon Musk's current forecast for the fiscal year 2025 anticipates only a significantly lower volume growth of 20-30% compared to previous expectations. Nevertheless, Tesla's stock performance has nearly fully recovered from its underperformance over the last three years, currently showing a 24% increase compared to the NASDAQ's 33% rise during the same period.
The firm's optimism about Tesla's future also relies on the expectation of a new Model 3 hatchback launch in the first half of 2025. This new vehicle is projected to expand Tesla's total addressable market (TAM) into the global compact car category, potentially capturing a market share of 12-15%. The Future Fund's delivery and adjusted earnings per share (EPS) estimates for Tesla's fiscal year 2025 are significantly higher than Wall Street's forecasts, predicting a 28% annual growth in deliveries as opposed to Wall Street's 15% estimate.
The Future Fund LLC's adjusted EPS estimate for Tesla's fiscal year 2025 is $3.80, which is 15% higher than the Wall Street consensus of $3.29. The firm is drawing parallels to the situation in 2020 when Model Y was viewed as an expansion into the crossover utility vehicle (CUV) segment, despite many on Wall Street not sharing this perspective at that time. Future Fund sees a similar low forecasting model occurring with the upcoming Tesla Compact model for 2025.