The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Tesla Stock Predictions

Summary:

In spite of its money-losing business operations, Tesla’s market cap of $58.9 billion makes it the most valuable U.S. car firm.

The release of the budget-friendly Model 3 only fortified the already-strong investor optimism over Tesla’s future growth potential.

The Model 3 is Tesla’s ticket to becoming a real producer of mass-market cars. Tesla cannot remain as a luxury car maker forever. It needs to become a people’s car vendor.

Elon Musk’s revelation that Tesla also has an upcoming long-haul electric truck further strengthens the bull case.

I Know First still has positive near and long-term algorithmic forecast for TSLA. This stock could hit $400 before 2017 ends.

It did not surprise me that Tesla (TSLA) is now the America’s most valuable car company. Its $58.9 billion market cap is notably higher than Ford’s (F) and General Motors (GM). As per the chart below, Tesla is now the fourth-biggest car company in the world. My fearless forecast is that Tesla’s market cap could hit $80 billion within the next two years. This will make it the no.2 car firm in the world, just behind Toyota Motors (TM).

The chart below also indicates that TSLA greatly outperformed F, GM, DDAIF, TM, and VLKAY. Of all major car firms, only luxury car maker Ferrari has better YTD return than Tesla.

(Source: The New York Times)

Why Tesla Has Consistent Bullish Support From Investors

Tesla’s rise in valuation is spite of its continuing money-losing business operations. Investors have a super bullish outlook over Tesla’s future revenue growth after it can deliver its 500,000 car sales/year target. It is not going to happen next year. However, the successful launch of the retail version of the $35k Model 3 last month convinced many investors that Tesla is on the right track to becoming a typical vendor of budget-friendly cars.

Mass scaling of the Model 3’s production is feasible. Musk promised 10,000/month production rate for the Model 3 by next year. Vertical integration should help cut production costs which could lead to Tesla finally making a profit. In the meantime, building and delivering 120k Model 3 units by end of 2018 will significantly boost Tesla’s revenue. By 2019, Tesla could start generating $20 billion in annual revenue.

It is my firm belief that a scaled out production of affordable Tesla cars is a strong inspiration for investors to keep pushing Tesla’s valuation higher. The company’s revenue last year was $7 billion. My estimate is that Tesla will post $9 to $10 billion in FY 2017. This is in spite of the Model 3 probably only getting an average production rate of 3,000 units/month from September to December.

The exuberant confidence over Tesla is greatly demonstrated when it easily raised $1.8 billion ($300 million than originally expected) in new bond offering to help finance the Model 3’s production. The debt market also trusts Tesla’s forward growth momentum.

Tesla’s Long-haul Trucks Are Also Coming

The other obvious bullish incentive is Tesla’s upcoming long-range (200 to 300 mile) Semi truck product. The wealthiest family in my town right now is involved in the trucking business. I therefore believe that Tesla has a great diversification potential in building and selling electric cargo trucks.

(Source: Tesla)

In the U.S., the highly-competive trucking industry generated $676.2 billion in revenue last year. That’s almost 80% of America’s freight bill. Building electric cargo trucks is a no-brainer for Tesla. Profit motives require trucking fleet operators to buy more efficient and reliable vehicles which could transport goods. Electric trucks will definitely become more efficient and easier to maintain than diesel-fueled trucks of today.

The obvious economic potential of building electric trucks has also inspired Daimler AG to also bet big on them. Daimler is the biggest manufacturer of trucks. It also owns cargo truck-specialists Freightliner, Sterling Trucks, and Western Star. Tesla’s interest in trucks is therefore clever.

Conclusion

The lingering investor exuberance over Tesla is based on facts. Elon Musk’s company offers the best growth potential among car firms. Toyota, General Motors, and Ford are boring companies that are stuck in their diesel/gas-powered car comfort zone. They are unlikely to see double-digit growth rate in revenue.

Toyota and others are now only starting to offer electric cars after Tesla showed them that there is indeed a massive market for electric vehicles. If you want large potential return on your investments, you better bet on the pioneer of commercial electric vehicle, Tesla.

My buy rating for TSLA is in line with the still-bullish algorithmic trend forecasts from I Know First. The latest chart below for Tesla hints there’s little danger of a major pullback. It is instead suggesting that betting on TSLA now has a high probability of turning out profitably.

Analysis of monthly technical indicators and moving averages also support my buy recommendation for TSLA.

Past I Know First Forecast Success with TSLA

I Know First has had vast success forecasting Tesla. There have been two articles published in 2017, one in January and another one in July.

At January 6th, Blair Goldenberg published a long-term bullish article on Tesla. Goldenberg explained that Tesla’s performance in 2017 is going to be great because they were expected to start selling Tesla model 3. This was utterly important as previous models have been priced disturbingly high. Goldenberg also pointed out that new autopilot software would raise demand. Since the article was published Tesla shares have skyrocketed 53.5% as seen on the following chart:

(Source: Google Finance: TSLA)

On July 6th, I Know First also made an accurate prediction on TSLA published in the form of a bullish article. In the article, it explains that Tesla’s CEO revealed that production for model 3 electric car would begin in July. The author stated that bulls would believe the CEO’s words and push the stock price up. During the 50-day period, TSLA’s shares increased by 12.7% in line with I Know First’s algorithm forecast and the content in the article. See chart below.

(Source: Google Finance: TSLA)

This bullish forecast for TSLA was sent to I Know First subscribers on July 6th, 2017. To subscribe today click here.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.