Jefferies upped its target price for Tesla stock to a Street high of $950, a 15% jump from Thursday’s close.
The analysts based their upgraded target “on higher capacity ramp and sustained demand.”
Jefferies added that Tesla has outperformed its peers amid the semiconductor shortage.
Tesla stock may have a big upside, Jefferies analysts say, even as it closes in on its all-time high.
The analysts, led by Philippe Houchois, raised their target price for the EV maker to $950, a high on Wall Street and a 15% jump from Thursday’s close at $818.01.
The new target is based “on higher capacity ramp and sustained demand,” the analysts said in a Friday note, noting that new facilities in Berlin and Austin would increase vehicle production by 500,000 in one year to 1.6 million.
“In a global auto industry plagued by complexity, Tesla continues to reduce complexity and set new standards for simplicity of design and assembly,” wrote the analysts, who rate the stock a buy.
Jefferies also noted that Tesla’s in-sourcing on semiconductor chips has helped it through the shortage, helping it outperformed peers on that key front.
Tesla stock has risen 4.7% so far this week and traded at $826.98 at 9:03 a.m. in New York. Shares hit an all-time high of $883.09 on Jan. 26.
Earlier this month, the company announced a 27% jump in China sales growth in September, its highest month-over-month production since the Shanghai planted began in 2019.
The company is set to report its quarterly earnings next week on Oct. 20. In its last earnings report, the company posted its most profitable quarter to date and crushed Wall Street’s expectations, despite supply chain woes.
Ark Investment Management founder and CEO Cathie Wood on Tuesday said China’s wide-ranging clampdown from technology to gaming will lead to an economic downturn for the country, subsequently affecting the global economy.
“I really do think that the policymakers in China are beginning to play with fire,” she said during her webinar, according to Reuters. “We will look back at this period in six months and say ‘Wasn’t it obvious there will be a major and unexpected slowdown in China?'”
The famed stock picker said the Asian superpower’s attempt to rein in various sectors increases the chances of committing policy mistakes and putting a drag on growth, Reuters reported.
For instance, China announced in August that video game time for kids should be slashed to three hours each week, while reports said the government temporarily suspended approvals of new online video games.
In July, Wood notably dumped shares of Chinese internet stocks, including Tencent and JD.com. But a month later she began buying some of them back.
“I’m not pessimistic about China in the longer run because I think they’re a very entrepreneurial society,” Wood told Bloomberg in September. “Sure, the government is putting more rules and regulations in, but I don’t think the government wants to stop growth and progress at all.”
Also in the webinar Tuesday, Wood doubled down on her bullishness towards Tesla. The electric carmaker rose 2% to clear its key $800 resistance level on Tuesday after the company announced significant sales growth in China for September.
Wood shot to prominence in 2020 thanks to her blockbuster performance driven by bets into mega-growth stocks. Her ETFs last year have delivered eye-popping returns, with her nearly $20 billion Ark Innovation flagship fund up more than 150% in 2020.
The valuation of Elon Musk’s SpaceX has skyrocketed to $100 billion following a secondary-share sale last week, CNBC reported Friday.
SpaceX investors agreed to sell up to $755 million in privately held stock at $560 a share, according to CNBC, meaning the space company did not raise new capital since only existing shares were sold.
Still, the latest valuation at $560 a share marks a 33% increase from a fundraising round in February, when SpaceX sold stock at $410.99 apiece to give it a $74 billion valuation, CNBC added.
And with its overall valuation jumping to $100 billion, SpaceX is now the second most valuable private company in the world, according to data from CB Insights.
Founded in 2002, SpaceX just trails behind TikTok parent Bytedance, which is worth $140 billion, and has leapfrogged payments startup Stripe, which is worth $95 billion.
The Hawthorne, California-based company launches satellites into orbit and transports astronauts to and from the International Space Station. But two other ventures have required aggressive fundraising lately, with February’s deal alone generating $1.2 billion.
Meanwhile, the jump in SpaceX’s valuation represents another victory for Musk, whose electric vehicle company, Tesla, has soared in value over the past year. Both firms, among others that he owns, have made the outspoken entrepreneur one of the richest people in the world.
Cathie Wood’s Ark Investment Management continued its selling spree of Tesla stock after the investment management firm offloaded $270 million worth of the electric-vehicle maker’s shares Tuesday.
Three of Wood’s exchange-traded funds – ARK Innovation (ARKK), ARK Autonomous Technology & Robotics (ARKQ), and ARK Next Generation Internet (ARKW) – cumulatively sold more than 340,000 Tesla shares Tuesday, according to its daily trading update.
All three funds, as of September 28’s market close, still have Elon Musk’s electric vehicle company as their top holdings at more than 10% each.
Wood, during Monday’s close, also trimmed her Tesla stake. Her ARKW and ARKQ funds sold over 42,000 shares combined.
The star stock-picker has made it a habit to sell Tesla stock when the electric carmaker has either outperformed in a certain duration or has grown too much to her liking in her portfolio.
A surge in yields has battered high-growth technology names. A rise in global bond yields makes the returns on stocks look less attractive.
Still, Wood has recently predicted that the company’s stock price will hit $3,000 by 2025 – a price target that requires the shares of the EV maker to rally an approximately 300% from its current level. But if shares reach that level next year, Wood said September 23 that she would sell her Tesla holdings.
Tesla stock was trading 1.2% higher at $786.89 as of 9:51 a.m. ET Wednesday. Shares have rallied 7.56% in September and gained around 8% year-to-date.
Wood, the founder and CEO of Ark Invest, shot to prominence in 2020 thanks to her blockbuster performance driven by bets into mega-growth stocks. Her ETFs last year have delivered eye-popping returns, with her flagship fund up more than 150% in 2020.
Shares of Tesla gained as much as 3% on Friday after the company said it delivered 201,250 vehicles during the second quarter.
Those results were about in-line with analyst estimates of 201,820 vehicles delivered, according to a Friday note from Wedbush analyst Dan Ives. Tesla’s delivery figures were driven by the success of its Model 3 and Model Y, which represented 199,360 of the vehicles delivered. That beat analyst estimates of 194,770.
Meanwhile, Tesla’s delivery of 1,890 higher-margin Model S and Model X vehicles missed analyst estimates of 5,550.
In a tweet on Friday, Musk congratulated the Tesla team on its delivery figures: “Congrats Tesla Team on over 200,000 car built & delivered in Q2, despite many challenges!!”
Those challenges referenced by Musk include semiconductor shortages, which has hampered production for automakers across the globe.
Tesla “yet again defied the skeptics and bears calling for a sizable miss with the chip shortage and China PR issues lingering in the month of April,” Ives said.
The CEO said in a tweet responding to David Portnoy’s criticism of bitcoin as a “pump and dump” scheme: “…I have not sold any of my Bitcoin. Tesla sold 10% of its holdings essentially to prove liquidity of Bitcoin as an alternative to holding cash on balance sheet.”
Tesla’s owned 41,953 bitcoin at the end of the first quarter, based off of the cryptocurrency’s closing price of $59,114 on March 31.
Tesla will report its first-quarter earnings after the market closes on Monday, and all eyes will be on guidance as the company grapples with a shortage in semiconductors.
The company already reported first-quarter deliveries earlier this month, which exceeded analyst expectations. The company said it delivered 184,800 vehicles in the quarter, representing a new record. Most of those deliveries consisted of the Model 3 and Model Y, rather than the higher-priced Model S and Model X.
The average analyst estimate for Tesla’s upcoming earnings report includes revenue of $10.3 billion and earnings per share of $0.79, according to data from Yahoo Finance.
As a whole, Wall Street remains skeptical on Tesla despite its ramping up of vehicle production over the past year. The company currently has only four buy ratings, eight hold ratings, and seven sell ratings among analysts.
Detailed below is what four Wall Street analysts expect from Tesla’s first-quarter earnings report.
JPMorgan: ‘Remain cautious on lofty valuation’
Tesla’s strong first quarter deliveries already spurred JPMorgan to increase its earnings estimates for the company earlier this month. But the bank remains cautious on Tesla, assigning the company an Underweight rating and price target of $155, representing downside potential of 78% from Friday’s close.
“While our blended price target of $155 implies -79% downside, we do not regard it as ungenerous as it actually values Tesla as the world’s second largest automaker by market capitalization, behind Toyota and roughly tied with Volkswagen despite the automakers each currently selling on the order of magnitude of 15-20x as many vehicles annually as Tesla,” JPMorgan said.
“Tesla’s current valuation appears to us to insufficiently incorporate what is likely to be greatly intensified competition in the market for battery electric vehicles and leaves little room for less than perfect execution,” JPMorgan concluded.
Credit Suisse: ‘Upside likely from regulatory credits’
Credit Suisse is ahead of consensus expectations for Tesla’s first-quarter earnings report, and sees three key themes that investors will focus on.
“Launch of new capacity remains most critical, especially in Europe,” Credit Suisse said, adding that Tesla’s Berlin factory is of highest priority as it enables Tesla to capitalize on the electric vehicle opportunity in Europe.
“1Q delivery beat reinforces upside on 2021 deliveries,” Credit Suisse said. The bank expects Tesla to deliver 929,000 vehicles in 2021, well ahead of consensus estimates of 831,000. “We expect benefit from continued ramp of China production, industry strength in US and China, and as the launch of the Berlin and Austin facilities in 2H21,” Credit Suisse said.
“Gross margin could see little upside, but investors would look past any softness,” the bank said, adding that volume strength in the quarter will likely be offset by cost inefficiencies, a negative mix of model sales, and a reduction in vehicle prices.
Credit Suisse maintains a Neutral rating for Tesla and a price target of $800.
Wedbush: ‘Expecting good news from Musk and Co.’
Wedbush analyst Dan Ives thinks Tesla will easily be able to beat Wall Street estimates for its first-quarter earnings given the company’s strong Q1 deliveries “and tight expense controls seen in Fremont.”
“The street is now laser focused on gauging the annual delivery trajectory for 2021… which we expect to drive the stock much higher over the coming months,” Ives said.
“We now believe Tesla could exceed 850,000 deliveries for the year with 900,000 as a stretch goal, despite the chip shortage and various supply chain issues lingering across the auto sector,” Wedbush said.
“We believe the tide is turning on the Street and the ‘eye popping’ delivery numbers coming out of China cannot be ignored with the trajectory on pace to represent ~40% of deliveries for Musk & Co. by 2022,” Ives concluded.
Wedbush maintains an Outperform rating for Tesla and a price target of $1,000.
RBC tweaked its first-quarter earnings estimates for Tesla following the release of its delivery figures earlier this month. RBC expects $10.5 billion in revenue for the quarter, which is lower than its previous estimate due to lower deliveries of the Model S and X, which command higher prices and profit margins.
RBC’s estimates include $400 million in regulatory credits, which Tesla sells to other automakers that don’t produce enough electric vehicles based on government mandates.
“On the call, we believe the items that will be in focus are auto-gross margins, free cash flow, capacity expansion updates, product updates and commentary about the impact of the semi-shortage to 2021 deliveries,” RBC said.
The firm lowered its 2021 delivery estimates to 825,000 from 860,000, “given we expect some supply chain issues,” RBC said. RBC maintains a Sector Perform rating for Tesla and a price target of $725.
Two men died on Saturday night when a 2019 Tesla Model S driving at high speed failed to negotiate a curve on a windy road in Spring, Texas.
Harris County Precinct 4 Constable Mark Herman said in an interview that, based on a preliminary investigation, there was no evidence anyone was at the wheel of the vehicle at the time of the crash.
“Our preliminary investigation is determining-but it’s not complete yet-that there was no one at the wheel of that vehicle. We’re almost 99.9% sure,” the constable said, per the Wall Street Journal.
The NHTSA has launched more than two dozen advanced driver-assistance-related investigations into crashes involving Tesla vehicles amid the company’s autonomous driving push.
The National Transportation Safety Board’s chairman, Robert L. Sumwalt, has also criticized Tesla on a number of occasions for their lack of compliance with regulators regarding self-driving tech.
In a 2020 NTSB meeting, Sumwalt said, “It is foreseeable that some drivers will attempt to inappropriately use driving automation systems. To counter this possibility, in 2017 we issued 2 recommendations to 6 automobile manufacturers. Five manufacturers responded favorably that they were working to implement these recommendations. Tesla ignored us.”
Just last week, Ford’s CEO also took a shot at Tesla on Twitter when announcing his company’s driverless tech, saying “BlueCruise! We tested it in the real world, so our customers don’t have to.”
Despite the recent crash, NHTSA investigations, and criticism from the competition, Tesla’s recent safety report shows its cars are some of the safest on the road.
In the first quarter of 2021, Tesla registered one accident for every 4.19 million miles driven when Autopilot was engaged. For comparison, The NHTSA’s most recent data shows there is an automobile crash every 484,000 miles on average in the US.
Even with a strong safety record, high-profile crashes like this one usually hurt Tesla’s stock.
The bearish fatal crash news also comes as Cathie Wood, one of Tesla’s biggest supporters, continues to sell shares.
Among the companies that stand at an advantage ahead of President Joe Biden’s massive infrastructure bill is Tesla, according to Morgan Stanley analysts, and owning the stock they say may be a bigger risk than not.
Biden’s $2 trillion infrastructure proposal carved out $174 billion for the electric vehicle sector alone, as the president aims to better equip American companies to compete with China, which is currently the market leader in the electric vehicle space.
Analysts at Morgan Stanley led by Adam Jones said in a note published Wednesday that Biden’s bill will increase Tesla’s advantage over legacy players and new entrants altogether.
The policy used to accelerate sales of electric vehicles will slow sales of internal combustion engine cars, the analysts said.
The analysts did warn that the build-out may follow a volatile and non-linear path.
“It will likely be complicated by a labyrinth of national and local laws that will present advantages and disadvantages to various automakers, depending on the year that you choose to analyze,” they said. “Put it all together and we believe auto investors face greater risk not owning Tesla shares in their portfolio than owning Tesla shares.”
Tesla stock is soaring after posting record quarterly delivery figures and landing continued support from analysts, but not everyone on the Street believes in the EV maker.
GLJ Research CEO Gordon Johnson told CNBC on Monday that he wasn’t impressed by Tesla’s recent delivery figures. The CEO holds a $67 price target on shares of the EV leader.
Johnson argued Tesla is “barely growing” despite “15 price cuts in the first quarter of this year” in his interview with CNBC’s Morgan Brennan and Loop Ventures’ Gene Munster.
The stock research chief said that “year-over-year growth is irrelevant” at Tesla due to changing sales patterns and a Chinese rollout and noted that the EV maker turned in just 2% sequential growth from the fourth quarter of last year to the first quarter of this year.
According to Johnson, Tesla “picked the low hanging fruit of entering the world’s largest three auto markets, US, China, Europe, and their sales grew just 2% quarter over quarter, despite 15 price cuts in the first quarter this year, 18 price cuts in total last year, and 52,500 more cars of capacity sold. “
Johnson also noted that Tesla sold “significantly less higher-margin S and X cars and significantly more lower margin model 3 and Y cars in the quarter.” According to the CEO, that could mean a $300 to $500 million hit to the company’s bottom line.
“So you’re looking at a company, a high growth company, that’s barely growing, is losing more money doing so, and is going to see all of its credit sales disappear next year,” Johnson said. “We see that as a big problem.”
Johnson was referring to tax credits that Tesla buyers receive for purchasing an electric, emissions-free vehicle. The credits are set to disappear in 2022, but some analysts believe President Joe Biden’s $2.3 trillion infrastructure plan will restore them before that happens.
Johnson also compared Tesla to Volkswagen in the interview, arguing Tesla’s current valuation doesn’t make any sense in relation to its peers.
Tesla is valued at close to $700 billion despite selling just 184,000 cars in the first quarter, while VW sells about 2.5 million cars a quarter and is valued at roughly $140 billion.
Some say Tesla’s valuation is based on its growth, but with the EV maker growing sales at just 2% sequentially, Johnson said he doesn’t “know what people are talking about when they say this is transformational growth.”
Gene Munster, Loup Ventures founder, commented after Johnson’s argument and said that he believes it’s unfair to look at sequential growth due to the first quarter being a “seasonally light quarter.”
Munster said he believes competition is the biggest risk to Tesla, but as long as the “value of car exceeds the competition” that Tesla will be able to “continue to have a measurable piece of a massive total addressable market.”
Dan Ives of Wedbush put out a note on Monday upgrading Tesla to an “outperform” rating and tagging a $1000 price target on the EV giant.
The analyst said he expects a roughly “$10,000 credit to catalyze EV consumer demand” moving forward.