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Tesla stock offers a good entry point on a 12% price correction

Tesla stock offers a good entry point on a 12% price correction

Tesla (NASDAQ: TSLA) stock price plummeted sharply in the last couple of weeks amid investors profit taking strategy and shift towards value stocks from growth stocks.

Tesla’s shares fell to the $700 level this week, wiping off the majority of gains it had generated during the early 2021 bull-run. The latest sell-off came after the shares of the world’s largest electric vehicle maker hit an all-time high of $900 last month on the back of stronger than expected profits along with robust vehicle deliveries and an improving outlook.

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Tesla stock performance. Finviz chart.

Upside potential

The market pundits and stock market investing guru’s always suggested investors buy on dip when the company has strong future fundamentals. Tesla stock is currently presenting an ideal stock-picking scenario for both short and long-term value investors.

Moreover, Tesla shares have significant upside potential in the days ahead for several reasons, including a robust global electric vehicle outlook, improving production potential, and increasing profits. Tesla was also recently named one of 2020’s best-performing green investments by Money.co.uk.

China, the European region, and the US plans to shift vehicles to green energy from fossil fuel. On the other hand, Tesla has aggressively capitalized on increasing demand through operational efficiencies and the establishment of new production facilities.  

Tesla has achieved its 500K deliveries target in 2020, with expectations that vehicle deliveries will increase 50% over a multi-year horizon.

The company expects to reach the 1 million electric vehicle deliveries target by the end of 2022. Still, market analysts, including Wedbush analyst Dan Ives, believe Tesla will beat its 2022 deliveries target and expects the electric car maker to hit 5 million deliveries annually by the end of the decade.

“Heading into year-end and 2021, we are seeing a major inflection of EV demand globally with our expectations that EV vehicles ramp from 3% of total auto sales today to 10% by 2025. We believe this demand dynamic will disproportionately benefit the clear EV category leader Tesla over the next few years especially in the key China region which we believe could represent 40% of its EV deliveries by 2022 given the current brisk pace of sales,” Dan Ives said.

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