Tesla Receives Target Price Increase

Tesla Receives Target Price Increase

Tesla, Inc. (NASDAQ:TSLA) received a price target boost even as the stock struggles to find any decent momentum to break out of its current trading range.

The Tesla Analyst: Wedbush analyst Daniel Ives reiterated an Outperform rating on Tesla shares and raised the price target from $310 to $350.

The Tesla Thesis: The optimism over Tesla stock is based on the increasingly bullish view of further electric vehicle share gains and margin stabilization in 2024, Ives said in a note. The analyst said he sees Tesla hitting the $1 trillion market cap in 2024 despite Wall Street’s skepticism.

Tesla’s market cap peaked at $1.24 trillion in early January 2022 and has fallen sharply since then amid the broader market retreat during the year. At Thursday’s close, the EV pioneer’s market cap stood at $809.04 billion.

Chart Courtesy of YCharts

The Street’s bear narrative for Tesla in 2023 was erosion in demand and intensifying competition across the board, the analyst said. “Instead Musk made a poker move for the ages and cut prices globally with China front and center to catalyze volumes/units which should now impressively be in the 1.8 million range for 2023,” Ives said.

Additionally, the company has “navigated the Category 5 storm in China well,” Ives said, adding that he expects fourth-quarter volume in China to hit another record. Tesla’s weekly EV registration in China in the recent reporting week rose strongly, keeping it on track for a record performance in the country.

For 2024, the analyst estimates 25%-30% year-over-year unit-volume growth, pushing units in the 2.2 million to 2.3 million range. He does not rule out upside surprises, driven by Model Y sales in China and Europe.

“While overall EV demand has clearly moderated globally we are still in the early days of this massive transformation with Tesla leading the way as we estimate by 2030 roughly 20% of autos will be EV based, Ives said.

Also benefiting Tesla would be the tempering EV transformation of General Motors Corp. (NYSE:GM) and Ford Motor Co. (NYSE:F), he added. Ford, for one, is rumored to slash its F-150 Lightning production, beginning in 2024.

Tesla will likely launch a sub-$30,000 EV over the next six to nine months, Ives said.

Looking ahead, the analyst sees margin stabilization, with the metric likely moving up from the current level and the auto margins heading back above the 20% threshold during 2024.

The analyst also highlighted another growth lever, namely the full-self-driving package, and expects it to rise to new heights with AI training. The company’s FSD capabilities would continue to see traction in the market despite safety concerns, he said.

“The ‘golden vision’ at Tesla is now monetizing its Supercharger network with batteries and AI/FSD next adding to the sum-of-the-parts story for Tesla,” Ives said.

“We view Tesla where Apple was in the 2008/2009 period as Cupertino was just starting to monetize its services and golden ecosystem with the Street not seeing the broader golden vision at the time,’ he added.

The FSD and the Supercharger network are worth an incremental $75 per share to the Tesla story over the next 12 to 18 months, the Tesla analyst said. “The Street will start to factor this dynamic into the stock as Tesla executes on its strategic vision with the next phase of the growth story abound,” he added.

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