Ever Haggiag is a Financial Analyst Intern at I Know First.

Tesla Stock Prediction for 2016

Tesla is known for its leading edge technology, appealing product portfolio, and differentiated business portfolio

Tesla is known for its leading edge technology, appealing product portfolio, and differentiated business portfolio Company is building a 35GWh lithium-ion Giga factory and has introduced a Power Wall battery for energy storage

I Know First’s predictive algorithm has released data indicating a bullish view on Tesla in the coming months

Developed nations, facing a flat-to-declining demand for electricity, are shifting from centralized, fossil-fuel based electricity grids to less carbon-intensive systems that integrate more distributed generating assets. By 2040, more than 50% of OECD power generation will be from renewables, versus about one-third – mainly hydro – today. Distributed solar will be the main source of new power in OECD nations every year through 2040 with about 880GW deployed over the next 25 years, placing immense burdens on the existing centralized grid system owing to its variability, because it forces the system a two-way energy flow for which the grid is unprepared, and because behind-the-meter solar challenges the traditional rate-based utilities business model.

(Source: Bloomberg New Energy Finance)

Navigant, a market research firm, forecasts that the main growth-driver of energy storage for renewables integration will be the distributed residential market, tied to the rapid deployment of rooftop solar. Residential solar is expected to account for about 23GW of Solar Energy Storage deployment through 2025.

Owing to its suitability for deployment behind the meter in residential systems, Navigant forecasts rapid deployment of Lithium-ion batteries to support renewables integration, mainly rooftop solar. Global installed capacity should exceed 65GW by 2025 from less than 1GW today.

Tesla’s PowerWall and Elon Musk’s Solar City

PowerWall is a battery that can easily be stored in homes, attached to a wall as the name describes. The idea behind this new battery is that with the implementation of solar panel’s on your house roof, the battery will charge during the idea with the excess solar energy provided, and power your home at night and in the evenings.

The new technology offered in theses batteries is revolutionary and we believe it will be able to power more and more homes as the solar panel industry increases. Tesla also introduced the PowerPack, a much larger battery that would be able to power larger spaces such as offices or villa’s.

We believe that this initiative from Tesla could be the key to a more eco-friendly future. Elon Musk, CEO of Tesla is also the Chairman of the Board for Solar City, a solar panel producer. The PowerWall combined with Solar City’s exceptional solar panels, which could eventually be installed on your home’s roof, will prove to be extremely efficient and eco-friendly.

(Source: Google)

After the initial investment, customers could exponentially reduce electricity expenses for the rest of their lives. We believe the PowerWall is an investment in the future. The product was launched at very reasonable prices, starting at $3,000 compared to extremely high prices for similar products offering lower quality and requiring storage space.

Risks to the PowerWall, and the growth of renewable energy

Declining oil and gas prices could slow adoption of higher-priced solar and wind generating capacity in some regions. Solar and wind make up a very small percentage of the global energy mix, fuel costs make up only about 30% of the cost of conventional electricity generation, and in some emerging markets, falling oil and gas prices are allowing local governments to reduce fossil-fuel subsidies, and allowing reinvestment in sustainable renewables generating capacity.

Opposition from Utilities. The US utilities are generally engaged in a flight-or-fight response to distributed energy, particularly rooftop solar, and are introducing connection charges, imposing curtailments, or seeking regulatory protection from self-generation. Utilities, responsible for the distribution infrastructure, are particularly well positioned to exploit or oppose this technology since distributed generation and storage assets typically benefit or impact the grid below the substation, over short distances (at 110volts, in the U.S.).

Tesla on a Hiring Spree

Tesla recently announced it believes 1,600 new hires will finally make it profitable. We’ve been of the opinion that Tesla was in need of fresh hires for a while, and they’ve finally opened the Job Openings. Could these hires really see Tesla turning profits? Only time will tell although we believe this is a very viable option. As mentioned above Tesla recently released plans to move into the energy storing space through batteries with “Tesla Energy Products”. We believe that the new hires will serve this purpose as well and that Tesla’s newest venture might just be very accelerated thanks to new experts in the field.

(Source: Bloomberg Business)

Forecast

I Know First supplies financial services, mainly through stock forecasts via their predictive algorithm. The algorithm incorporates a 15-year database and utilizes it to predict the flow of money across 2000 markets. The self-learning algorithm uses artificial intelligence, predictive models based on artificial neural networks, and genetic algorithms to predict money movements within various markets.

I Know First published a bullish forecast on Tesla. The three-month and one-year forecasts for Tesla are included. Tesla for the 3 Month period has a signal of 9.25 and predictability of 0.29 and for the 1 Year period has a signal of 60.32 and a much higher predictability of 0.34 for the same time horizon.

Previously I Know First’s Algorithm predicted the performance of Tesla for the period of November 1st to December 1st published on the 4th of November.

Back then when the prediction was made only 3 days after the stock had gained 7.90%. One month later after the prediction was made we saw an amazing return of 9.29% in the one-month horizon.

Conclusion:

We have a fundamentally overweight rating for Tesla. Tesla carries notable investment positives, including a highly differentiated business model, appealing product portfolio, and leading edge technology. Our I Know First Algorithm released a Bullish Signal for Tesla which supports our view for the stock.

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