Investor's Corner
Tesla price targets move as analysts unravel massive Q2 earnings beat
Following Tesla’s (NASDAQ: TSLA) second-quarter Earnings Call that took place on Monday evening, analysts tasked with following the automaker’s stock have revised their price targets, working to unravel the massive beat that the company reported. Here is a quick rundown of what a few analysts are saying and how their outlook of the stock has changed after Tesla’s Q2 2021 Earnings Call.
Canaccord Genuity: Jed Dorsheimer lowers Tesla PT, maintains ‘Buy’ rating
Dorsheimer lowered his price target on Tesla to $768.00 from $812.00, maintaining a “Buy” rating on the stock. Impressed with Tesla’s “surprisingly strong Q2,” Dorsheimer and fellow analysts stated that Model Y builds from Germany and Texas will equip the 4680 cells Tesla has long worked to perfect. Energy generation and storage revenue doubled from Q1, and the selling-out of Megapacks until 2023 outlines a drastic need for Tesla’s energy products. However, the main concern moving ahead for Canaccord is “increased chip shortage concerns highlighted on the Earnings Call.”
Tesla did indicate that engineers had worked to create new configurations of controllers to combat semiconductor shortages.
The company stated:
“Our team has demonstrated an unparalleled ability to react quickly and mitigate disruptions to manufacturing caused by semiconductor shortages. Our electrical and firmware engineering teams remain hard at work designing, developing, and validating 19 new variants of controllers in response to ongoing semiconductor shortages.”
Dorsheimer holds a 55% success rate and an average return of 32.9%, according to TipRanks. He is ranked 213th out of 7,609 analysts.
RBC Capital: Shanghai’s Export “Hub,” Auto GM ex-credits hit record
RBC Capital analyst Joseph Spak raised Tesla’s price target to $745 from $718 with a “sector perform” rating.
Spak said, “Volumes were higher, but cost improved. In particular, we believe a good part of this improvement is because Tesla is now using Shanghai as the ‘primary vehicle export hub.’” Additionally, Tesla’s reports of Auto GM ex-credits hit a record of 25.8%, which was +380bps q/q, +710bps y/y, according to StreetInsider (per @SawyerMerritt).
Spak has a 53% success rate with an average return of -8.3%. He is ranked 7,456 out of 7,609 analysts on TipRanks.
CFRA: Increase to $675 from $650
CFRA analysts raised their outlook on TSLA stock by only $25 after the wildly successful earnings report, but the outlook is positive. “The beat was driven by a stronger-than-expected top line and margins, as revenue rose 90% to $11.96B ($560 above consensus) and auto gross margin expanded 300 bps to 28.4% (230 bps above consensus.).”
Tesla’s anticipated forecast to begin Model Y production at Berlin and Austin by EoY 2021 is also highlighted by CFRA, especially considering falsified reports that Musk’s inner circle expected Berlin to not begin production until early 2022, months later than originally expected.
CFRA maintains a “Hold” rating on Tesla stock.
* CFRA raises Tesla PT to $675
“We increase our 12-month price target by $25 to $675, based on a ‘22 P/E of 95.1x. We raise our adjusted EPS estimates by $0.40 to $4.95 for ‘21 and by $0.10 to $7.10 for ‘22.”$TSLA pic.twitter.com/QD6JyrhXxz
— David Tayar (@davidtayar5) July 27, 2021
At the time of writing, TSLA shares traded at $636.24, down 3.25%, despite the company’s strong Q2 earnings.
Disclosure: Joey Klender is a TSLA Shareholder.
Tesla stock (NASDAQ: TSLA) closed at an all-time high on Tuesday, jumping over 3 percent during the day and finishing at $489.88.
The price beats the previous record close, which was $479.86.
Shares have had a crazy year, dipping more than 40 percent from the start of the year. The stock then started to recover once again around late April, when its price started to climb back up from the low $200 level.
This week, Tesla started to climb toward its highest levels ever, as it was revealed on Sunday that the company was testing driverless Robotaxis in Austin. The spike in value pushed the company’s valuation to $1.63 trillion.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
It is the seventh-most valuable company on the market currently, trailing Nvidia, Apple, Alphabet (Google), Microsoft, Amazon, and Meta.
Shares closed up $14.57 today, up over 3 percent.
The stock has gone through a lot this year, as previously mentioned. Shares tumbled in Q1 due to CEO Elon Musk’s involvement with the Department of Government Efficiency (DOGE), which pulled his attention away from his companies and left a major overhang on their valuations.
However, things started to rebound halfway through the year, and as the government started to phase out the $7,500 tax credit, demand spiked as consumers tried to take advantage of it.
Q3 deliveries were the highest in company history, and Tesla responded to the loss of the tax credit with the launch of the Model 3 and Model Y Standard.
Additionally, analysts have announced high expectations this week for the company on Wall Street as Robotaxi continues to be the focus. With autonomy within Tesla’s sights, things are moving in the direction of Robotaxi being a major catalyst for growth on the Street in the coming year.
Elon Musk
Tesla needs to come through on this one Robotaxi metric, analyst says
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Tesla needs to come through on this one Robotaxi metric, Mark Delaney of Goldman Sachs says.
Tesla is in the process of rolling out its Robotaxi platform to areas outside of Austin and the California Bay Area. It has plans to launch in five additional cities, including Houston, Dallas, Miami, Las Vegas, and Phoenix.
However, the company’s expansion is not what the focus needs to be, according to Delaney. It’s the speed of deployment.
The analyst said:
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Profitability will come as the Robotaxi fleet expands. Making that money will be dependent on when Tesla can initiate rides in more areas, giving more customers access to the program.
There are some additional things that the company needs to make happen ahead of the major Robotaxi expansion, one of those things is launching driverless rides in Austin, the first city in which it launched the program.
This week, Tesla started testing driverless Robotaxi rides in Austin, as two different Model Y units were spotted with no occupants, a huge step in the company’s plans for the ride-sharing platform.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
CEO Elon Musk has been hoping to remove Safety Monitors from Robotaxis in Austin for several months, first mentioning the plan to have them out by the end of 2025 in September. He confirmed on Sunday that Tesla had officially removed vehicle occupants and started testing truly unsupervised rides.
Although Safety Monitors in Austin have been sitting in the passenger’s seat, they have still had the ability to override things in case of an emergency. After all, the ultimate goal was safety and avoiding any accidents or injuries.
Goldman Sachs reiterated its ‘Neutral’ rating and its $400 price target. Delaney said, “Tesla is making progress with its autonomous technology,” and recent developments make it evident that this is true.
Investor's Corner
Tesla gets bold Robotaxi prediction from Wall Street firm
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Tesla (NASDAQ: TSLA) received a bold Robotaxi prediction from Morgan Stanley, which anticipates a dramatic increase in the size of the company’s autonomous ride-hailing suite in the coming years.
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Percoco dug into the Robotaxi fleet and its expansion in the coming years in his latest note, released on Tuesday. The firm expects Tesla to increase the Robotaxi fleet size to 1,000 vehicles in 2026. However, that’s small-scale compared to what they expect from Tesla in a decade.
Tesla expands Robotaxi app access once again, this time on a global scale
By 2035, Morgan Stanley believes there will be one million Robotaxis on the road across multiple cities, a major jump and a considerable fleet size. We assume this means the fleet of vehicles Tesla will operate internally, and not including passenger-owned vehicles that could be added through software updates.
He also listed three specific catalysts that investors should pay attention to, as these will represent the company being on track to achieve its Robotaxi dreams:
- Opening Robotaxi to the public without a Safety Monitor. Timing is unclear, but it appears that Tesla is getting closer by the day.
- Improvement in safety metrics without the Safety Monitor. Tesla’s ability to improve its safety metrics as it scales miles driven without the Safety Monitor is imperative as it looks to scale in new states and cities in 2026.
- Cybercab start of production, targeted for April 2026. Tesla’s Cybercab is a purpose-built vehicle (no steering wheel or pedals, only two seats) that is expected to be produced through its state-of-the-art unboxed manufacturing process, offering further cost reductions and thus accelerating adoption over time.
Robotaxi stands to be one of Tesla’s most significant revenue contributors, especially as the company plans to continue expanding its ride-hailing service across the world in the coming years.
Its current deployment strategy is controlled and conservative to avoid any drastic and potentially program-ruining incidents.
So far, the program, which is active in Austin and the California Bay Area, has been widely successful.
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