Investor's Corner
Tesla (TSLA) analysts settle on bullish outlooks after impressive Q3 Earnings
Tesla (NASDAQ: TSLA) revealed an impressive third-quarter in terms of production, deliveries, and profitability during its Q3 Earnings Call on October 21st. The quarter was referred to as “our best quarter in history” by CEO Elon Musk, and analysts at various Wall Street firms have revised their price target outlooks for the electric automaker.
Analysts at Baird, JMP Securities, Oppenheimer, Wedbush, and Canaccord Genuity all revised their outlooks for Tesla’s stock by increasing their price targets. The boost in PTs without a doubt came from Tesla’s impressive Q3 performance, but each analyst had their own reasoning for the figure they came up with.
Baird
Baird analysts Ben Kallo and David Katter bumped their price target to $488 from $450, marking the second time they’ve upgraded Tesla’s outlook in October. The Baird analysts also upgraded TSLA shares to “Outperform.” Interestingly, Kallo and Katter’s note to investors indicated that they were wrong for downgrading the stock to a “Neutral” rating in January, stating that their move was “too early.” After their revised “Neutral” rating, TSLA shares soared over 400% on the year.
“Clearly incorrect, we are now upgrading share as we think TSLA has the substantial access and ability to deploy capital, and has multiple ways to drive substantial revenue growth,” Baird’s note said to investors. “Tesla’s competitive moat over peers is substantial (and growing, enabled buy rapid capital deployment) and we think it is unlikely traditional OEMs [original equipment manufacturers] will be able to effectively compete over time.”
JMP Securities
Joseph Osha and Hilary Cauley of JMP Securities boosted their price targets for TSLA stock to $516 after the Q3 Earnings Call. The two analysts also upgraded the stock with an “Outperform” rating.
“In terms of the stock, we have tried to keep our eye on the horizon as opposed to being influenced by quarter-to-quarter developments. Even though commentary yesterday caused us to raise our outlook for 2021, it does not by itself give us cause to change our stance on the stock,” JMP wrote to investors in a note. “That said, we do believe the outlook for margins and for cash flow generation over the next several years appears to be higher than we thought. This impacts not only our financial model, but also the level of risk we assign to our 2025 outcome and the multiple we apply.”
Oppenheimer
Oppenheimer analyst Colin Rusch boosted his price target to $486 from $451 and also placed an “Outperform” rating on TSLA stock. Rusch is a notable Tesla bull who has advised long-term investors to buy the automaker’s stock “on any near-term weakness.” Additionally, Rusch has stated in the past that perhaps Tesla’s biggest advantage is software and Over-the-Air Updates, which have stumped legacy automakers.
In terms of the Q3 Earnings Call, Rusch’s outlook is based on financials and Tesla’s future developments. “We are encouraged by improving manufacturing margins and factory throughput, which gives us comfort in raising out-year GM estimates and PT,” he said. “We are watching closing for accelerating growth in recurring revenue from insurance, financing, software-driven applications like robotaxi’s, which may begin to shift valuation multiples higher.”
Wedbush
Wedbush’s Dan Ives boosted his Bull Case price target to $800 following the Q3 Earnings Call and reflects on the potential of Giga Shanghai’s output as a clear indicator of Tesla’s future success. While his base price target remained at $500 with a “Neutral” rating, Ives does see overwhelming EV demand growth playing out in Tesla’s favor.
“China remains the ‘hearts and lungs’ of the Tesla demand growth story playing out over the next year along with underlying Europe EV strength playing out in the field,” Ives wrote. “We are raising our bull case from $700 to $800 reflecting these improving demand/profitability dynamics heading into 2021 for Tesla despite a soft macro and COVID backdrop.”
Canaccord Genuity
Jed Dorsheimer of Canaccord Genuity maintained a “Hold” rating but boosted his price target to $419 from $377. Dorsheimer’s main outlook has been boosted based on Tesla’s focus on automotive manufacturing, which has been a main concern moving forward to increase efficiency and production output.
“TSLA remains a juggernaut in the EV space that deserves credit for the vision and willingness to challenge the status quo in auto manufacturing. We maintain our HOLD rating though, as we feel the bull-bear debate is unlikely to abate and valuation appears rich by any standard,” Dorsheimer’s note to investors stated.
Tesla recorded its fifth-consecutive quarterly profit, non-GAAP earnings of $0.76 per share, $809M GAAP operating income and a $5.9B increase in cash and cash equivalents.
Tesla (TSLA) crushes Q3 earnings with record profit, accelerates global growth
Disclaimer: Joey Klender is a TSLA Shareholder.
Elon Musk
Tesla locks in Elon Musk’s top problem solver as it enters its most ambitious era
The generous equity award was disclosed by the electric vehicle maker in a recent regulatory filing.
Tesla has granted Senior Vice President of Automotive Tom Zhu more than 520,000 stock options, tying a significant portion of his compensation to the company’s long-term performance.
The generous equity award was disclosed by the electric vehicle maker in a recent regulatory filing.
Tesla secures top talent
According to a Form 4 filing with the U.S. Securities and Exchange Commission, Tom Zhu received 520,021 stock options with an exercise price of $435.80 per share. Since the award will not fully vest until March 5, 2031, Zhu must remain at Tesla for more than five years to realize the award’s full benefit.
Considering that Tesla shares are currently trading at around the $445 to $450 per share level, Zhu will really only see gains in his equity award if Tesla’s stock price sees a notable rise over the years, as noted in a Sina Finance report.
Still, even at today’s prices, Zhu’s stock award is already worth over $230 million. If Tesla reaches the market cap targets set forth in Elon Musk’s 2025 CEO Performance Award, Zhu would become a billionaire from this equity award alone.
Tesla’s problem solver
Zhu joined Tesla in April 2014 and initially led the company’s Supercharger rollout in China. Later that year, he assumed the leadership of Tesla’s China business, where he played a central role in Tesla’s localization efforts, including expanding retail and service networks, and later, overseeing the development of Gigafactory Shanghai.
Zhu’s efforts helped transform China into one of Tesla’s most important markets and production hubs. In 2023, Tesla promoted Zhu to Senior Vice President of Automotive, placing him among the company’s core global executives and expanding his influence beyond China. He has since garnered a reputation as the company’s problem solver, being tapped by Elon Musk to help ramp Giga Texas’s vehicle production.
With this in mind, Tesla’s recent filing seems to suggest that the company is locking in its top talent as it enters its newest, most ambitious era to date. As could be seen in the targets of Elon Musk’s 2025 pay package, Tesla is now aiming to be the world’s largest company by market cap, and it is aiming to achieve production levels that are unheard of. Zhu’s talents would definitely be of use in this stage of the company’s growth.
Tesla analyst Andrew Percoco of Morgan Stanley teased the company’s dominance in its self-driving initiative, stating that its lead over competitors is “not even close.”
Percoco recently overtook coverage of Tesla stock from Adam Jonas, who had covered the company at Morgan Stanley for years. Percoco is handling Tesla now that Jonas is covering embodied AI stocks and no longer automotive.
His first move after grabbing coverage was to adjust the price target from $410 to $425, as well as the rating from ‘Overweight’ to ‘Equal Weight.’
Percoco’s new note regarding Tesla highlights the company’s extensive lead in self-driving and autonomy projects, something that it has plenty of competition in, but has established its prowess over the past few years.
He writes:
“It’s not even close. Tesla continues to lead in autonomous driving, even as Nvidia rolls out new technology aimed at helping other automakers build driverless systems.”
Percoco’s main point regarding Tesla’s advantage is the company’s ability to collect large amounts of training data through its massive fleet, as millions of cars are driving throughout the world and gathering millions of miles of vehicle behavior on the road.
This is the main point that Percoco makes regarding Tesla’s lead in the entire autonomy sector: data is King, and Tesla has the most of it.
One big story that has hit the news over the past week is that of NVIDIA and its own self-driving suite, called Alpamayo. NVIDIA launched this open-source AI program last week, but it differs from Tesla’s in a significant fashion, especially from a hardware perspective, as it plans to use a combination of LiDAR, Radar, and Vision (Cameras) to operate.
Percoco said that NVIDIA’s announcement does not impact Morgan Stanley’s long-term opinions on Tesla and its strength or prowess in self-driving.
NVIDIA CEO Jensen Huang commends Tesla’s Elon Musk for early belief
And, for what it’s worth, NVIDIA CEO Jensen Huang even said some remarkable things about Tesla following the launch of Alpamayo:
“I think the Tesla stack is the most advanced autonomous vehicle stack in the world. I’m fairly certain they were already using end-to-end AI. Whether their AI did reasoning or not is somewhat secondary to that first part.”
Percoco reiterated both the $425 price target and the ‘Equal Weight’ rating on Tesla shares.
Tesla stock (NASDAQ: TSLA) just got a price target boost from its biggest bear, Gordon Johnson of GLJ Research, who raised his expected trading level to one that is 95 percent lower than its current trading level.
Johnson pushed his Tesla price target from $19.05 to $25.28 on Wednesday, while maintaining the ‘Sell’ rating that has been present on the stock for a long time. GLJ has largely been recognized as the biggest skeptic of Elon Musk’s company, being particularly critical of the automotive side of things.
Tesla has routinely been called out by Johnson for negative delivery growth, what he calls “weakening demand,” and price cuts that have occurred in past years, all pointing to them as desperate measures to sell its cars.
Johnson has also said that Tesla is extremely overvalued and is too reliant on regulatory credits for profitability. Other analysts on the bullish side recognize Tesla as a company that is bigger than just its automotive side.
Many believe it is a leader in autonomous driving, like Dan Ives of Wedbush, who believes Tesla will have a widely successful 2026, especially if it can come through on its targets and schedules for Robotaxi and Cybercab.
Justifying the price target this week, Johnson said that the revised valuation is based on “reality rather than narrative.” Tesla has been noted by other analysts and financial experts as a stock that trades on narrative, something Johnson obviously disagrees with.
Dan Nathan, a notorious skeptic of the stock, turned bullish late last year, recognizing the company’s shares trade on “technicals and sentiment.” He said, “From a trading perspective, it looks very interesting.”
Tesla bear turns bullish for two reasons as stock continues boost
Johnson has remained very consistent with this sentiment regarding Tesla and his beliefs regarding its true valuation, and has never shied away from putting his true thoughts out there.
Tesla shares closed at $431.40 today, about 95 percent above where Johnson’s new price target lies.
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