Analysts predict that the stock performance for electric carmakers Tesla and Rivian will improve in 2023 after significant losses this year.
Both carmakers lost more than 70 percent of their stock values this year due to issues in supply change as the world was still recovering in the aftermath of the COVID-19 pandemic. Tesla and Rivian also displayed inconsistent quarterly earnings results throughout the year.
Canaccord Genuity senior analyst George Gianarikas said Tesla’s shares would reach $304 next year, with its full self-driving beta release being the main driver for the growth. Earlier in September, Gianarikas had a higher projection of $801 — equals 190 percent upside movement — and called Tesla a “clear leader” in electric vehicles.
Gianarikas’ lower projection for Tesla came after Elon Musk acquired Twitter and became its CEO. The analyst said Tesla’s stock performance was “loosely” tied to Twitter’s prospects.
“For now, we view this as short-term noise and, over the medium to long term, see Tesla's stock tied to Tesla's earnings,” Gianarikas added.
Investment bank Evercore gave a price target of $350 next year for Tesla, or equal to a 220 percent upside. Evercore said Tesla remained a leader in the EV market with over 70 percent of the market share. Tesla’s dominance over the EV market, particularly in the U.S., is expected to extend through 2025 and even 2026.
In the future, however, Tesla will face a “slew of new, lower-priced and compelling entrants threatens to erode market share below 50 percent threshold,” according to Evercore.
Meanwhile, Navellier & Associates chief investment officer of asset manager Louis Navellier predicted that Tesla would only post a 37 percent upside to $150 in 2023. Navellier explained that people still perceived EVs as “luxury vehicles” especially due to the high prices of the batteries, making it difficult for electric automakers to achieve profitability.
In 2022, Tesla’s stock was down around 72 percent. As a megacap growth stock, Tesla’s drop significantly affected Wall Street’s performance.
Musk’s acquisition of Twitter has redirected some of Tesla’s growth resources to tend the social media company. The company also encountered supply chain issues, particularly related to its Shanghai factory.
Just recently, reports said Tesla had cut its production in Shanghai. Some analysts said it was due to the surge of COVID-19 cases in the city. It is expected that production in Shanghai will only return to normal after February due to labor shortage during the holiday season.
Gianarikas lowered his price target for Rivian from $61 to $55. He still expects Rivian to grow in 2023 despite the supply chain issue because the carmaker has continued to “improve operations, ramp production and enhance product quality.” He said Rivian’s improvement efforts could help the company survive amid an uncertain macroeconomic situation.
Evercore projects that Rivian’s stock will experience a 97 percent upside to $35 in 2023. The investment bank analysts explained that they were less optimistic about Rivian because it would need $4 to $6 billion just to cover the launch of its R2 through 2026. From 2023 to 2026, Evercore also expects Rivian to “burn” $7 to $9 billion for its operation.
Unlike the other two experts, Navellier’s price target for Rivian in 2023 is $15 or 15 percent downside. He even said investors should avoid Rivian’s stock because the company would probably not achieve profitability due to persistently high battery costs.
“Also, since both Ford and GM will be selling electric pickups at substantially lower prices, I think that they will take market share from Rivian,” Navellier said. “The fact that Ford decided to sell Rivian stock rather than partner with Rivian is a long-term problem.”
Earlier this year, Rivian’s supply chain issues led to the company slashing its production guidance by half. The company then corrected its guidance, saying it can meet the 2022 production target, which is 25,000 units. As of Q3, however, Rivian’s production only hit 14,317. Rivian, which is listed on NASDAQ, has lost 82 percent of its value this year.