Tesla’s (NASDAQ: TSLA) shares have advanced more than 12% in the last thirty days, and the current price stands around $719. The current risk/reward ratio is not good for long-term investors, although an analyst from Morgan Stanley raised his price target to $900 this week.
Fundamental analysis: There are certainly better long-term investment opportunities at the moment
Tesla is expanding its business; the company increased its revenue in 2020 to $31.53B from $24.57B in 2019 and expects to achieve strong revenue growth in 2021. Tesla shares have found a strong support level above $600, and for now, there is no risk of a positive trend reversal.
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Tesla is working on vehicles tailored to Chinese consumers, but these new vehicles could also be sold in other global markets. China is a rapidly growing EV market, and Tesla needs to expand the Chinese market in order to maintain its growth narrative.
“We are encouraged by the strong reception of the Model Y in China and are quickly progressing to full production capacity. The new Model S and Model X have also been exceptionally well received, with the new equipment installed and tested in Q1, and we are in the early stages of ramping production,” Tesla reported.
This week, Adam Jonas, an analyst from Morgan Stanley, raised his price target on Tesla to $900 on expectations that the company could grow its revenue even more in the upcoming period. Adam Jonas raised the FY21 delivery forecast of Tesla by 3% to 809K units and updated his model for Q1 deliveries to 184,800 units.
Still, with the market capitalization of $714B, this company is not undervalued, and maybe it is not the right moment for investing in shares of Tesla. If we compare the company’s EBITDA of $4.27B and the current market capitalization, we can notice that this stock is overvalued relative to other companies in this industry.
The book value per share is less than $25, and the Wall Street analyst consensus is that the stock is overpriced. Technically looking, Tesla shares could advance again above the $800 resistance, but my opinion is that there are certainly better long-term investment opportunities at the moment.
Technical analysis: Tesla shares continue to trade in a bull market
Tesla shares have advanced from $136 above $900 since May 2020, and the current price stands around $719. If the price jumps above $800, it would be a signal to trade Tesla shares, and the next target could be around $850, but if the price falls below the $700 support level, it would be a firm “sell” signal.
Tesla is expanding its business, the company expects to achieve strong revenue growth in 2021, but maybe it is not the right moment for investing in Tesla shares. The Wall Street consensus is that Tesla is currently overpriced, and there are certainly better long-term investment opportunities at the moment.