Tesla Stock: The Electric Vehicle Giant Is a Solid Buy In 2022
August 04 2022 - 6:06AM
Finscreener.org
Tesla (NASDAQ: TSLA)
used to be an automobile company. Today it is a clean energy
corporation that develops and produces electric vehicles, battery
energy storage systems for homes and grids, solar panels, and solar
roof tiles, as well as related goods and services for clients all
over the world. It is one of the most important EV (Electric
Vehicle) players in the world. With fingers in so many pies, Tesla
has to work twice as hard while convincing markets, that it’s a
good stock.
The supply chain challenges,
Russia-Ukraine conflict, chip shortages, and other issues have all
had a significant negative impact on the EV market this year. As a
result, TeslaU+02019s stock has also been experiencing difficulties
and is down over 32% year to date. Tesla shares are, however, once
again witnessing a type of rally in recent days, following its most
recent financial reports.
Why Tesla stock is a buy
Tesla has been one of the first
movers in the competitive EV space, and its CEO Elon Musk ensures
that the company is always in the limelight. Musk’s hype, as well
as the company’s spectacular growth, has allowed Tesla to hit
extraordinary valuations in recent years.
Tesla continues to expand its
portfolio of products and services. It has also benefited greatly
from its investment in Powerwall, a stationary rechargeable lithium-ion battery
product that stores solar energy for backup protection. Another
game changer in the solar sector could be the launch of its
solar roof, which is intended to create clean energy for a
home for decades.
After TeslaU+02019s
second-quarter report
came out better than expected, its
shares began to skyrocket. The company’s revenue surged 43% year
over year to $16.9 billion even in the face of unfavorable market
conditions caused by significant supply chain bottlenecks and
COVID-related factory shutdowns in China. In addition, the
companyU+02019s adjusted earnings, which were $2.27 per share,
increased by 57% over the same period last year.
Despite the headwinds wiping out
around 25% of the carU+02019s deliveries for the quarter, Tesla
nevertheless managed to create over 258,000 vehicles in
the second
quarter, which is 25%
higher compared to the year-ago period. Additionally, at just over
254,000 units, the companyU+02019s overall deliveries grew by a
whopping 27% year over year.
Tesla is now heading towards
recording an annual delivery run rate of more than one million
vehicles, increasing its delivery targets by an average of 50% over
a multi-year period. Further, the company can now produce two
million EVs globally each year, up from just one million around the
same time last year.
Tesla has a massive reach
Despite the short-term obstacles,
there are still many opportunities in the electric vehicle sector,
and the long-term prospects still appear to be very bright.
According to
Allied Market Research,
the market for electric vehicles could reach $823.75 billion
worldwide by 2030, rising at a CAGR of 18.2% between 2022 and
2030.
Though the chip shortage issue
may not be going away any time soon, EV manufacturers like Tesla
will be able to operate at full capacity and considerably increase
their income and profits when the chip shortage issue is finally
resolved.
Investing in Tesla is a lot safer
than investing in small cap EV stocks. The company has got immense
room for growth even now and is in a perfect position to reap the
benefits in this growing sector.
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