Tesla is entering Saudi Arabia, launching sales this month after expanding in the region. Despite a recent dip in stock performance, analysts are divided, with a consensus ‘Hold’ rating. The upcoming expansion presents both risks and long-term growth potential, with projected earnings growth amid strong EV market incentives.
Tesla (TSLA) is set to enter the Saudi Arabian market with a significant launch on April 10, following its expansions in the Middle East. This marks a crucial moment in a region where electric vehicles (EVs) currently make up only 1% of car sales. The event will feature Tesla’s EVs and solar products, alongside the opening of pop-up stores in major cities such as Riyadh, Jeddah, and Dammam, while substantial investments are planned for 2025 and beyond. Observing the impact of this strategic expansion on TSLA’s stock will be essential.
Headquartered in Austin, Texas, Tesla has grown into an $833.6 billion company, capturing about 70% of the U.S. market share for battery-powered electric vehicles. The company has not only focused on vehicles but has also spearheaded advancements in battery storage, solar energy, and AI-driven autonomous technologies. Over the past year, TSLA shares have appreciated by 49%, although year-to-date the stock has seen a decline of 35%, attributed to increasing competition and controversies surrounding CEO Elon Musk.
In terms of valuation, TSLA trades at 98.13 times forward adjusted earnings and 7.66 times sales, figures that exceed the industry averages. However, when assessing its five-year averages, TSLA may represent a unique investment opportunity despite its high valuation. Tesla recently released its fourth-quarter 2024 earnings report on January 29, which fell short of analysts’ expectations, despite achieving record vehicle deliveries. With revenues of $25.7 billion showing only a 2.1% year-over-year increase, the figure did not meet the predicted $27.1 billion.
Tesla delivered 495,570 vehicles during this quarter, reflecting a modest increase of 2.3% compared to the prior year. Nevertheless, the income from operations saw a significant decrease of 23.3% to $1.6 billion. The adjusted net income did rise by 3.3% to $2.6 billion, and the adjusted EPS also increased but did not meet analysts’ estimates. As the company anticipates releasing first-quarter fiscal 2025 figures on April 2, analysts project a slight decline in deliveries, predicting approximately 373,000 vehicles, a 3.6% drop from last year, due to weak demand and Elon Musk-related political backlash.
Nonetheless, Tesla’s global expansion initiatives remain active, particularly in Saudi Arabia, where new government incentives for EV adoption could foster growth. The company is also exploring a market presence in India through direct imports and partnerships with local entities. Analysts foresee a 40% rise in Tesla’s first-quarter EPS year-over-year to $0.49, with expectations for significant growth of 17.7% in the full year 2025 and 37.1% in 2026.
Regarding analyst expectations, opinions are divided on Tesla’s future trajectory. While some analysts are concerned about first-quarter deliveries, others are optimistic about Tesla’s long-term potential. As it stands, TSLA has a consensus rating of “Hold,” with among 41 analysts, 16 categorizing it as a “Strong Buy,” 3 as a “Moderate Buy,” 12 as “Hold,” and 10 as a “Strong Sell.” The average price target is $334.08, indicating a potential upside of 26%, while the highest forecast suggests a notable increase of 106%.
In conclusion, Tesla’s upcoming entry into the Saudi Arabian market represents a significant growth opportunity for the company amid a challenging landscape. The contrasting perspectives of analysts reflect uncertainty in the immediate future of TSLA stock; however, the long-term outlook remains promising, given projected earnings growth and new market incentives. As investors monitor the impacts of this international expansion, the consensus rating of ‘Hold’ suggests caution while retaining watchfulness over potential upsides.
Original Source: www.tradingview.com
