While Tesla stock (NASDAQ:TSLA) ended Monday’s trading at a nearly 18-month low, the electric car maker has nonetheless received an optimistic outlook from Macquarie Capital Inc. In a recently published note, the Wall Street firm gave the company an Outperform rating and a $430 price target, citing the electric car maker’s unique position to “lead in ecosystem platforms.”
Macquarie analyst Maynard Um wrote in a recent note that in the long term, Tesla would likely enjoy an edge against competitors due to the strength and integration of its vehicle hardware and software systems. The analyst pointed out that the auto industry is currently “on the precipice of a multi-decade transformation driven by disruptive innovation and technology.” Thus, companies focused on highly disruptive ecosystem platforms such as Tesla would likely be successful. Um also took a particular focus on Tesla’s real-world Autopilot data as pivotal in establishing the company’s place in the emerging autonomous driving industry.
The Macquarie analyst noted that in the short-term, he sees enough levers to fund Tesla’s debt maturity events, particularly if the company’s stock reaches $360 per share by 3/1/2019. Um did note, though, that it would be beneficial for Tesla to raise equity, as it would further strengthen the company’s longer-term outlook and provide a cushion for any unexpected events or periods of “economic softening.” The analyst also stated that there are two key demand drivers which provide comfort around Tesla’s sales.
“Our thesis is also predicated on TSLA having enough levels to get over the debt maturity hump including cash flow from ZEV credit (estimate potential for $500-$600 million in 2H 18) & Model 3 sales, access to $1.2 billion unused debt commitment, potential for credit amendments, et al. We see two demand drivers into year-end (key to achieving profits) that provide comfort around sales: 1) pent-up demand before the end of lifetime Supercharging on 9/18, and 2) pent-up demand before year-end when US subsidies diminish. TSLA appears on track for production targets & should be able to achieve profitability in 2H.”
The analyst concluded that ultimately, Macquarie’s Outperform rating and $430 price target for Tesla is driven by five primary factors – the electric car maker’s accelerating vehicle growth, the company’s “unique” potential among OEMs, its technology integration and differentiation, the expansion of its energy storage business, and its opportunity to lead in the autonomous driving field.
Amidst the release of the Macquarie analyst’s recent note, TSLA stock started showing some recovery, trading up 3.36% at $258.98 per share when markets opened on Tuesday.
The steep plunge of Tesla stock over the past week comes amidst the company’s improving fundamentals and even more accolades for its latest vehicle, the Model 3. Apart from showing impressive Q3 vehicle delivery and production results, Tesla has also been exhibiting signs that its ramp for the Model 3 ramp is getting even better. Since October began, for example, Tesla has registered more than 17,000 new Model 3 VINs, with the majority of the filings corresponding to Dual Motor vehicles. This Sunday, Tesla also shared an update stating that the NHTSA has found the Model 3 to be the car with the “lowest probability of injury” among the vehicles the agency has tested so far. Immediately following the Model 3 was Tesla’s two other cars – the Model S and the Model X.
Tesla’s vehicle assembly line in Fremont, CA.
Admittedly, some of the stock’s volatility could be attributed to Elon Musk’s behavior on Twitter last Thursday. Less than a week after agreeing to a settlement with the SEC regarding the commission’s lawsuit over his “funding secured” tweet last August, Musk opted to troll the SEC on Twitter. Tesla was down 4.4% on Thursday, but after Musk’s tweets, TSLA fell by 2% more. Friday and this past Monday were equally unkind to Tesla stock.
Fellow billionaire and iconic philanthropist Richard Branson recently expressed his thoughts on what Elon Musk could do to reduce his stress in Tesla. While speaking to CNBC, Branson noted that it would be best if Musk, a hands-on leader who has a tendency to overdo his work, learns the art of delegation.
“I think he maybe needs to learn the art of delegation. It’s important that he’s got to find time for himself, he’s got to find time for his health, and for his family. He’s a wonderfully creative person, but he shouldn’t be getting very little sleep. He should find a fantastic team of people around him and still jump in on all the major issues. And I think the reason that I have such an enjoyable life – a long life – has been finding wonderful people to run our companies on the key issues I can then get involved. So if I was to sit down with him – I have talked to him about it – but I think learning the art of delegation better would be his one flaw,” Branson said.
As of writing, Tesla shares are trading up 5.24% at $263.69 per share.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
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if you believe in C02 based climate change which I don't due to manufacture and transporting materials and their longevity the C02 reduction they are meant to achieve is questionable to say the least. I've only thrown in the Climate Change debate because it adds context the ICE market will most probably be wiped out before the lie is exposed.[/QUOTE]
Open a high school science book and learn what the Carbon Cycle is.
[QUOTE="JCJ007, post: 24850, member: 35876"]Elon is god etc etc the actual business he is running however is flawed and in poor health whatever you think of EVs[/QUOTE]
You do realize that Tesla is more than EV's. Take a look at the Hornsdale Power Reserve and Gigafactory 2.
Please explain the flaw in producing renewable energy, storing renewable energy and producing vehicles that use that energy.
[QUOTE="cygnusexwon, post: 24768, member: 34683"]It's OK JCJ007. The adults are talking now. You can go back to playing with your blocks of coal.
I apologize for this post. It is uncalled for and has no place here.
This is a completely absurd statement.
Open a high school science book and learn what the Carbon Cycle is.
You do realize that Tesla is more than EV's. Take a look at the Hornsdale Power Reserve and Gigafactory 2.
Please explain the flaw in producing renewable energy, storing renewable energy and producing vehicles that use that energy.
I apologize for this post. It is uncalled for and has no place here.
Thank you for the apology no there is nothing wrong with the aims of Tesla and although I disagree with the ideas about CO2 based climate change that doesn't mean I'm against new energy technology in fact I think cars should be lighter more efficient and I think we must use our resources more carefully in the future. The aims of Tesla are aims I support what I am against is the huge government subsidy the spin and the mistruths about the numbers behind Tesla and associated companies. Elon could be the great genius everyone says or he could be cracking under the pressure of holding the entire thing together with chewing gum and string to stop it collapsing. There are allegations of Bait and Switch on the Model 3, quality issues, manufacturing issues, the exodus of executives and Elon's mercurial behaviour being signs of something worrying happening under the bonnet of Tesla. My questions are about is the company/ companies really as great as we think they are?
Just a brief post to emphasize again that it’s ok for people to express dissenting opinions and debate on this forum. We want to ensure people feel Teslarati is & remains a free, yet welcoming environment.
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Keep on trucking! ;)
Middle of 2020 is really where the last of the short theories are proven wrong, and it becomes perfectly clear that the tax incentives are not necessary to sell millions of EVs per year in the US alone.
Very conservative estimates from this analyst - $360 by the end of March and $430 by the end of June. I'm expecting $400 within 4 weeks, $600 by the end of July, and over $1000 by the middle of 2020.
Middle of 2020 is really where the last of the short theories are proven wrong, and it becomes perfectly clear that the tax incentives are not necessary to sell millions of EVs per year in the US alone.
Wow... this is major bull talk! Love it!
Very conservative estimates from this analyst - $360 by the end of March and $430 by the end of June. I'm expecting $400 within 4 weeks, $600 by the end of July, and over $1000 by the middle of 2020.
Middle of 2020 is really where the last of the short theories are proven wrong, and it becomes perfectly clear that the tax incentives are not necessary to sell millions of EVs per year in the US alone.
You are wrong what can I say your wildly optimistic valuations are beyond all possible reality, hope you haven't staked everything on it, otherwise it's just as well Teslas are nice spacious cars as you may end up living in one! My prediction for 2020 is i'm not confident Tesla will actually make it that far. Tell you what, if I do short it and make a big profit I'll send you a slice by cheque to cheer you up.
