Tesla (NASDAQ: TSLA) has a new Street-high price target from Alex Potter of Piper Sandler, who increased his outlook on the automaker’s stock from $1,200 to $1,300 following a surge in the company’s valuation this week. Potter sees Tesla in the proverbial driver’s seat of the EV sector, especially as competition and self-labeled “Tesla killers” have fallen flat.
Any Tesla enthusiast or follower of the EV industry knows that Tesla has been the gold standard for the sector. As a result, manufacturers have sat in Research and Development buildings crafting and designing what they think will be the car to derail Tesla’s momentum, killing its recognition as the leader in electrification and halting its domination in sales. While Tesla’s market share is naturally dropping due to more options on the market, the company still remains the King of the EV Hill, as numerous “Tesla Killers” have disappeared from the narrative due to delays or real-world performance that doesn’t quite line up with previous claims.
‘Tesla Killers’ are like Bigfoot: They don’t exist and they never will
With that being said, Tesla has been tested by nearly every notable automaker. Volkswagen, Ford, GM, and others have crafted what they believe is the perfect answer for Tesla’s domination. All ended up well short in performance, range, or as a car in general, Tesla has maintained its spot at the top. Potter recognizes Tesla’s unequivocal spot as number 1 in the sector, among other things.
Potter has a $1,300 price target on Tesla stock with an Overweight rating following the company’s impressive financial performance in Q3 2021. With two new manufacturing plants set to be finished by the end of the year, increasing sales and production primes Tesla for another year of owning EV market share.
“We now expect Tesla’s sales volume to max out around 11.5M units in 2030, which likely implies a #1 ranking in terms of worldwide market share,” Potter writes in a note to investors.
Additionally, the development of Tesla’s business model as a whole promotes deferred revenue, which could offset some margin weakness. Although the company reported an automotive gross margin of 30.5% and an operating margin of 14.6%, Tesla has other things in the pipeline that only point toward those figures growing. The most likely piece of deferred revenue is the company’s Full Self-Driving suite, which could help support the company’s financial spreadsheet as Giga Berlin and Giga Texas ramp production over the next several quarters, TheStreet reported.
Potter and Piper Sandler’s new price target eclipses that of Pierre Ferragu from New Street Research, which sits at $1,298.
Tesla stock is up 12.3% this week following news of rental company Hertz purchasing 100,000 Model 3s for its fleet. The deal is worth $4.3 billion.
Alex Potter is ranked 332 out of 7,713 analysts on TipRanks, with a success rate of 53% and an average return of 31.6%.
Disclosure: Joey Klender is a TSLA Shareholder.