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3 Reasons Why Tesla Will Have a Great 2022

Tesla started 2022 on the right foot by reporting it delivered more cars than expected in 2021. Here's why TSLA should continue to have a great year.

Despite supply-chain disruptions, vehicle recalls, and other various headwinds, Tesla's  (TSLA) - Get Tesla Inc Report stock performed very well in 2021. TSLA investors have seen the stock rise more than 80% in the last six months. And if the first few days of 2022 are any indication, they'll see more gains ahead.

Figure 1: TSLA stock 1-year period performance.

Figure 1: TSLA stock 1-year period performance.

Tesla is one of the most popular stocks among traders and investors on the main online discussion forums. So let's list some of the top reasons why the electric vehicle (EV) stock has a great year ahead.

1. Tesla's High Valuations Will Be Justified

Tesla's market cap is over $1 trillion. The company is priced according to the technology it offers, not necessarily by the number of units it delivers.

It's currently among the top 10 most valuable companies in the world and trades at the highest price-to-earnings multiple: 360 times. That's five times more than runner-up Amazon  (AMZN) - Get Amazon.com, Inc. Report.

But trends show that Tesla's output will start justifying its high valuation.

The company recently reported it delivered a record-breaking number of cars in the fourth quarter of 2021. Tesla delivered 308,600 vehicles. This represents year-over-year growth of 87%.

Analysts had expected fourth-quarter deliveries to be around 267,000.

As for full-year 2021, Tesla reported it delivered a total of 936,000 vehicles, versus an estimate of 897,000. For 2022, the company is expected to deliver 1.3 million vehicles. This should be no problem for Tesla, especially with its gigafactories in Texas and Germany coming online.

Mad Money's Jim Cramer recently threw in his two cents on Tesla's record-breaking delivery report. He pointed out that Tesla should be viewed as a great technology company above all else. Although many analysts consider its valuation expensive, Cramer thinks it will seem cheap in the near future:

"If you think about [Tesla's car delivery] rate, in 2025, this company is going to make 10 million cars. That’s how you have to look at [Tesla’s valuation]."

2. The Elon Musk Factor

In a market driven by high-speculation assets such as cryptocurrencies, nonfungible tokens (NFTs), special purpose acquisition companies (SPACs), and other disruptive technology trends, investors often seem willing to overlook fundamentals and focus on far-out potential.

Tesla and SpaceX CEO Elon Musk is one of the wealthiest people on Earth. And for better or for worse, his voice has been very influential on the markets.

Figure 2: Tesla and SpaceX CEO Elon Musk.

Figure 2: Tesla and SpaceX CEO Elon Musk.

His Bitcoin- and Dogecoin-related tweets have caused buying and selling frenzies. And Tesla is under the iconic CEO's influence, too.

However, putting aside Elon Musk's meme potential and tapping into his genius, the market is looking forward to Tesla's new products this year. Musk is expected to unveil new vehicle models such as a semi-truck, a "supercar," and a cheap electric car in 2022. He should also deliver more information about the long-awaited Tesla Cybertruck on the company's next earnings call.

Any positive announcements from Musk should lift his company's stock.

3. Tesla Is the Major EV Player

Currently, when it comes to electric vehicles produced worldwide, Tesla is the major player. The company has a market share of 15%, followed by Volkswagen and General Motors  (GM) - Get General Motors Company Report.

In 2021, the size of the electric car industry was $287 billion. Third-party research firms expect this to grow to $1.3 trillion by 2028, at an impressive CAGR of 24%.

Tesla is the biggest player in this industry due to its cutting-edge technology and customer loyalty. That means it will naturally be a beneficiary of this industry's growth.

However, keep in mind that strong competition from other big EV players like Lucid  (LCID) - Get Lucid Group, Inc. Report and Rivian  (RIVN) - Get Rivian Automotive, Inc. Class A Report, as well as from traditional automakers like Ford  (F) - Get Ford Motor Company Report, can pose a threat to Tesla's frenetic growth. 

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting the Wall Street Memes)