Tesla shares, which debuted on June 29, 2010, have shown incredible gains over the past ten years. 2020 has been a year of dizzying success and ambitious plans for Tesla. Analysts raised their estimates of Tesla shares and noted that the company raised about $ 12 billion from the sale of additional shares in 2020.
Today, Tesla (TSLA) has the largest capitalization of $ 834.18 billion among automotive companies in the world and is the fifth most valuable company in the S&P 500, ahead of Facebook (FB).
Tesla’s stock rally of 814% over the past 12 months has forced Wall Street skeptics to double or triple their target prices and ratings, although market averages are well below the $ 880 stock price at Friday’s close.
In the ten years since Tesla’s IPO on June 29, 2010, the electric car maker’s shares are up an impressive 18,318%.
An investment of $ 10,000 in 2010 would increase today to $ 1.8 million, which indicates an average annual return of over 63%.
For comparison, the same $ 10 thousand invested in an investment portfolio equivalent to the S&P 500 at the same time would have grown by only 267% to $ 36,732, which is only 13% per year.
What will happen to Tesla in 2021?
In 2020, Tesla proved it can be profitable, although before it managed to deliver nearly half a million electric vehicles a year, the company was losing profit every year since it was founded in 2003.
Many analysts are warning investors about the risks for Tesla in 2021. First, for Tesla shares there is a risk of decline amid the desire of investors to lock in profits from the incredible growth over the past year, and many analysts have long referred to this growth as a “bubble”.
Second, Tesla’s production growth is likely to slow in 2021 as Tesla’s Fremont and Shanghai plant nears their production capacity peaks.
Third, Tesla’s capex is set to skyrocket this year as the company builds two factories, one in Germany and the other in Texas. At the same time, gene. Tesla director Elon Musk warned that these factories will take longer to reach large-scale production rates than it took the Shanghai plant.
Analyst Joseph Spack of RBC Capital Markets, who upgraded his rating of Tesla stock from “sell” to “hold” and doubled its target price to $ 700, noted how Tesla was able to raise capital very cheaply by selling shares in 2020 instead of relying on on their own financial resources. Tesla raised about $ 12 billion from the sale of additional shares in 2020.
However, investors cannot be sure that Tesla will be able to continue to fund its investments in 2021 using this rise in stocks. In addition, a drop in shares will provoke the opposite situation – for its ambitious goals, Tesla will have to seek expensive loans.
While some still believe Tesla’s stock will continue to rise, others are calling for a look at the company’s real market share in the global automotive market at less than 1% and the growth of competitors around the world. Investors’ expectations for Tesla are very high and it will be difficult for the company to meet them this year.