Analyst who correctly predicted Tesla's stock drop revamps target

Few stocks boast as many ardent bulls and bears as Tesla.

Its electric vehicles consistently get picked as best-in-class or panned for poor quality, and fans and foes of mercurial Chief Executive Elon Musk constantly argue the pros and cons of his leadership.

Tesla's share price reflects this ongoing tug-of-war, making it one of the S&P 500's most volatile stocks.

For example, Tesla's share price tumbled during the 2022 bear market and more than doubled to its 2023 highs. Since then the shares have been clobbered, dropping 44%. In 2024, the shares have lost about a third of their value.

The selloff in Tesla's shares surprised many who were optimistic that EV-sales growth would accelerate because of new factories and the launch of its anticipated Cybertruck pickup.

However, the decline didn't catch TheStreet Pro's Bruce Kamich off guard. In January he correctly forecasted this year's decline, and in February he reiterated his downbeat outlook, saying, "Avoid the long side of [Tesla]" because it was "poised for further declines."

Sure enough, that bearishness has proved prescient, particularly following the disappointing full-year guidance in February and disconcerting first-quarter-delivery numbers on April 2.

The share-price decline prompted Kamich to update his outlook, including a new price target. Given his recent track record, investors ought to pay attention.

Tesla profits from widespread EV adoption

Tesla's Elon Musk is arguably the single most important factor in the electric-vehicle industry's success.

Rather than focusing on the environmental benefits of displacing gas-guzzling internal combustion engine cars and trucks with EVs, he concentrated on performance and luxury. 

Related: Analysts overhaul Tesla stock price targets after deliveries disappoint

The result was a lineup of EVs with breakneck 0-to-60 times and eyepopping top speeds, vehicles that can outperform rivals from Porsche, Mercedes-Benz, and BMW.

The Model S Plaid can reach 60 miles per hour in under two seconds, and variants of its highly popular Model Y, a midsize crossover SUV, and Model 3, a lower-cost sedan with high-performance roots, can reach that speed in under four seconds.

Musk's performance-oriented mindset was a big departure from past EV and hybrid gasoline/electric efforts, including General Motors' EV1 or Toyota's Prius, which focused on fuel economy.

Tesla has undeniably profited from its approach, given that sales and earnings have soared over the past five years. In 2018, revenue totaled $21.5 billion and the company lost 38 cents a share. In 2023, revenue was more than quadruple that figure at $96.8 billion, and Tesla earned $4.30 a share on a GAAP-earnings basis.

Unsurprisingly, that rapid growth didn't go unnoticed on Wall Street. The company's share price is up 657% since 2018.