Investor's Corner
Tesla stock reels in $900 following Elon Musk’s big space achievement, analyst upgrades
Tesla (NASDAQ: TSLA) moves closer to the $900 mark after a big weekend for CEO Elon Musk. Musk qualified for the first tranche of his multibillion-dollar performance bonus, and SpaceX successfully launched two astronauts into space this past weekend. The electric automaker also received several upgrades from analysts based on Tesla’s future outlook in international markets.
Jairam Nathan of Daiwa Securities launched coverage of the automaker with a Buy rating and a $910 price target. He believes the electric automaker is a few short steps away from global dominance.
In a note to investors, Nathan wrote that Tesla is close to succeeding in international markets like China and Europe. Nathan believes that the company can have similar success in Europe and China, especially considering the Gigafactory production facilities that are being built in the two locations.
Simply put, Tesla is “on the cusp of replicating its success in the U.S. EV market to potentially larger markets in China and Europe,” the Daiwa analyst wrote, according to Barron’s.
Wedbush analyst Dan Ives also increased his price target from $600 to $800. Ives stated, “we continue to believe EV demand in China is starting to accelerate with Tesla competing with a number of domestic and international competitors for this market share.”
At the time of writing, Tesla stock traded at $873.95, up 4.66%, or $38.95.
The surge in price could be attributed to projections that the electric vehicle sector will skyrocket in 2021 based on a new report by Cairn Energy Research Advisors, CNBC reported. Sam Jaffe of Cairn stated, “There’s pent-up demand for electric vehicles. We will see a combination of factors make 2021 an inflection point for the sale of electric vehicles.”
Musk’s success over the weekend with the newly-earned bonus and successful SpaceX launch may have attributed to the stock price increase as well. SpaceX became the first privatized company to successfully launch NASA astronauts into orbit.
Currently, Tesla’s two international production facilities are located in Shanghai, China, and Brandenburg, Germany. Shanghai is now producing around 4,000 Model 3 vehicles a week, while Berlin is still under construction and is set to begin manufacturing in July 2021.
Giga Shanghai has been producing variants of the Model 3 since December 2019, but Tesla did not begin delivering built cars to public customers until January 2020. The first cars built in the facility were initially given to employees and not Chinese citizens.
Since the first Model 3s were delivered to China’s first buyers of what has come to be known as the “Made in China” versions of the sedan, Tesla has continued to ramp its production rates and introduce new configurations of the vehicle. Currently, construction crews are also working on the second phase of the Chinese vehicle manufacturing plant, where Tesla’s latest car, the Model Y crossover, will be built.
The steady demand for Tesla’s electric cars has allowed the company to be recognized as one of China’s most popular EV brands. In April 2020, the Model 3 was the second most popular electric car in China, trailing the Qin Pro EV from Xi’an-based BYD Automotive. This information is according to the EV Sales Blog, a website that tracks the sale of electric cars around the world.
In Germany, Tesla is continuing to push toward the groundbreaking of its Gigafactory in Brandenburg, a state encircled by Berlin. Giga Berlin will supply the European markets with Tesla’s electric vehicles. The construction of this Gigafactory has encountered barriers from COVID-19 and residents’ concerns, but Tesla has managed to remain on schedule thanks to support from German politicians.
The Giga Berlin facility will employ 12,000 people, providing a positive impact on Germany’s economy.
Nathan’s outlook of dominance in Europe and China is backed by Tesla’s willingness to become a foreign automaker and establish a presence in countries other than the United States. With substantial support from the massive Chinese automotive market and European countries, there is plenty of speculation that Tesla will thrive even more when the company establishes production facilities in foreign lands.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
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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