Gary Black Adjusts Tesla Price Targets: Short-Term and Long-Term Insights

Gary Black, the Managing Partner of The Future Fund LLC, has elevated his price target for Tesla Inc (NASDAQ:TSLA) from $270 to $300, while also presenting a long-term target of $600 by the year 2030. This revision comes in light of improved earnings forecasts and positive market signals.

What Changed? Black shared on social media platform X that his updated 6 to 12-month price target is based on a revised earnings per share (EPS) estimate of $16 for 2030, which is an increase from his previous estimate of $15. His analysis applies a PEG multiple of 1.5x and anticipates long-term EPS growth at 25%.

He noted that Wall Street analysts are adjusting their expectations for Tesla's fiscal year 2025 earnings, with new price targets reflecting improved auto gross margins and anticipated delivery growth. Black's revised earnings predictions are $2.40 for FY 2024 and $3.60 for FY 2025, both slightly higher than Wall Street's consensus estimates of $2.38 and $3.22, respectively.

Currently, the average price target for Tesla among Wall Street analysts is $227. Black observed that a difference of $42 per share between Tesla’s current trading price and his target price is nearing the largest gap since June 2023.

In a detailed explanation, Black highlighted his strategy of gradually reducing Tesla holdings starting in September 2022 when the stock was around $280 amid Tesla's price cuts for electric vehicles. At that time, Tesla accounted for 12.2% of their investment portfolio.

"In hindsight, it was the right decision for our investors," Black remarked, noting that Tesla's performance was significantly below that of the Nasdaq 100 index afterwards. Specifically, while Tesla's stock dipped about 5% since he began selling, the Nasdaq 100 saw a substantial growth of about 66% during the same period.

Recent Performance: Tesla's earnings for the third quarter exceeded market expectations, with adjusted earnings per share reaching $0.72, which was well above the projection of $0.58.

Elon Musk recently commented on the volatility of Tesla's stock, comparing it to a "rollercoaster" ride, echoing sentiments similar to those of renowned investor Warren Buffett regarding the stock market.

However, not all market analysts share an optimistic outlook on Tesla. A particular analyst, known for an 86% accuracy rate in predictions, has forecasted an 11% decline for the company's shares, underscoring the varied opinions in the market.

Current Stock Status: As of now, Tesla shares are priced at $262.51 after a decrease of 2.48% on Monday, with a further drop of 0.92% in after-hours trading. Despite these fluctuations, Tesla has seen a year-to-date increase of 5.67%, according to available financial data.

Tesla, Earnings, Investments