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Tesla (TSLA) will soon be as big as BMW with “twice better margins,” analyst says

The Tesla Model Y. (Credit: MotorTrend)

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Tesla (NASDAQ: TSLA) has had its shares slide in value over the past couple of days, but Pierre Ferragu of New Street Research insists it is nothing to worry about. The analyst indicates the future outlook is positive, and Tesla is well on its way to being one of the largest car companies in the world in terms of output and sales.

Ferragu appeared on CNBC’s Squawk Alley on Friday, September 4, to talk about tech stocks and their slight decline during the trading week. Ferragu talked about Apple stock initially and then gave his thoughts about Tesla shortly thereafter.

“If you look at Tesla today, things are very tangible,” Ferragu said. “I believe that with a very high level of conviction. [Tesla] has very unique EV cars in terms of performance. They are building an iconic brand, and they are like an innovation machine on this electric vehicle technology.”

Ferragu also believes Tesla is head and shoulders above competitors in assisted driving and semi-autonomous tech.

“In addition to that, they have, by far, the best driver-assistance technology in the market. So these are the things I love,” Ferragu added.

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Ferragu holds a $1,500 price target and a Neutral rating for TSLA stock, and he believes the sky is the limit for the company’s growth in the coming years.

The level of confidence that Ferragu has in Tesla because of its iconic brand building, innovative tech developments, and semi-autonomous developments, has him believing the company can be the size of BMW in just five years.

BMW Group sold 2.5 million vehicles across its BMW, Mini, and Rolls-Royce brands in 2019, a 1.2% increase from 2018. Tesla, on the other hand, delivered 367,500 cars last year. This was a drastic increase compared to 2018, where the company delivered 245,240 vehicles. With more production facilities on the way, growth is certainly expected in the coming years.

“If I play them out over the next five years, I think Tesla is going to be, in five years from now, the size of BMW, with twice better margins. I think, by then, it could be worth $2,500, maybe $3,000 [per share],” Ferragu said.

The company’s valuation goes past its automotive sector and into the energy storage side of the company. Many analysts do not acknowledge Tesla Energy, which is a big mistake in determining the valuation of the company.

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“On top of that, you have the Energy Storage opportunities, the Solar opportunities, and the Insurance opportunity, that I think is potentially very tangible. And then you have the opportunity for Tesla to really achieve something with its Full Self-Driving. But all the things are going to play out in the stock and be materialized and visible within multiple years,” he said.

Today, Ferragu is advising his clients to buy TSLA stock on the automotive side of things, but that isn’t to say that the company shows extreme upside potential within other facets of its business plan within the coming years.

Disclaimer: Joey Klender is a TSLA shareholder.

Update: Added BMW and Tesla sales figures in 8th paragraph at 1:18 PST.

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Joey has been a journalist covering electric mobility at TESLARATI since August 2019. In his spare time, Joey is playing golf, watching MMA, or cheering on any of his favorite sports teams, including the Baltimore Ravens and Orioles, Miami Heat, Washington Capitals, and Penn State Nittany Lions. You can get in touch with joey at joey@teslarati.com. He is also on X @KlenderJoey. If you're looking for great Tesla accessories, check out shop.teslarati.com

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Investor's Corner

Tesla gets its best analysis from Morgan Stanley as ‘it’s all about to change’

He maintained its ‘Overweight’ rating and the $410 price target Morgan Stanley had on the stock.

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(Credit: Tesla)

Tesla has gotten perhaps its best analysis from Morgan Stanley in quite some time, as the Wall Street firm claims that “it’s all about to change.”

That phrase could be used for both the company’s status and the world in general.

Analyst Adam Jonas said in a new note on Thursday to investors that Tesla could be one of the major winners in terms of the global transition from what it is now to what it will be.

He describes the global shift that will occur over the next few years:

“Have you interacted with a robot today? Have you even seen a robot today? No? Well, take a mental picture because it’s all about to change. When we meet someone who has never been in a Waymo or a Tesla Cybercab (which is most people), we frequently see a wince and a response such as ‘I’m not sure I’d feel comfortable getting in a car without a driver.’ We imagine going back in time to 1903 and asking people if they’d feel comfortable in an airplane.’”

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The same technological revolutions that have occurred over the past 150 years will continue to occur again and again. We are on the verge of another, Jonas believes, as companies like Tesla are working on artificial intelligence tech, which includes changing the way we look at things like transportation and labor.

Jonas includes an interesting tidbit in his note about how humanoid robots could change wages, and how it could work into the advantage of Tesla, especially as it is developing its own Optimus robot:

“We estimate 1 humanoid robot at $5/hour can do the work of 2 humans at $25/hour, generating an NPV of approximately $200k/humanoid. 1 robot shaped car can potentially drive down cost/mile of a ride share vehicle to <$0.20 mile (1/10th human-driven ride-share).”

Jonas sees Tesla as a key player in how AI will impact things like manufacturing and various automotive industries, and he believes there is long-term potential for AI, robomobility, and even autonomous eVTOL platforms.

Tesla stock: Morgan Stanley says eVTOL is calling Elon Musk for new chapter

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He maintained its ‘Overweight’ rating and the $410 price target Morgan Stanley had on the stock.

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Tesla stock gets crazy prediction from CEO Elon Musk

Musk says this is what it would take to be a millionaire from a Tesla investment right now.

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A red Tesla Roadster driving around a turn
(Credit: Tesla)

Tesla stock (NASDAQ: TSLA) got a crazy prediction from CEO Elon Musk recently, as the future of the company seems to be moving more toward AI, autonomy, and robotics, and away from automotive, which is what it has traditionally been recognized as.

Over the past few years, as Tesla has prioritized its Full Self-Driving suite, its rollout of a dedicated Robotaxi program, and the development of the Optimus bot, the company has gained a new reputation from analysts.

It was always looked at as a stock with tremendous potential by many Wall Street firms, some more than others.

The most bullish analysts, like Cathie Wood of ARK Invest, believe the company will eventually reach a multi-trillion-dollar valuation and a share price of over $2,000. Her $2,600 price target does not include any contributions of Optimus. Instead, it leans on Full Self-Driving and Robotaxi.

Tesla tops Cathie Wood’s stock picks, predicts $2,600 surge

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Based on where the company is now, there are a lot of potential catalysts. The Robotaxi expansion, as well as affordable vehicles, its prowess in AI and Robotics, and its powerful energy division are all arguments for investment.

One X user said that a $150,000 investment in Tesla right now would likely make you a millionaire. Musk said he thinks that sentiment is “probably correct.”

He’s echoed this belief in recent earnings calls, including the one for Q2, which happened in July:

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“I do think if Tesla continues to execute well with vehicle autonomy and humanoid robot autonomy, it will be the most valuable company in the world. A lot of execution between here and there. It doesn’t just happen. Provided we execute very well, I think Tesla has a shot at being the most valuable company in the world. Obviously, I am extremely optimistic about the future of the company.”

Tesla is trading at $316.50 at the time of writing, and has a market cap of just under $1 trillion.

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Tesla stock gets another analysis from Jim Cramer, and investors will like it

“Tesla is morphing right now. It’s in transition from being a car company to being a technology company.”

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Credit: CNBC Television/YouTube

Tesla stock (NASDAQ: TSLA) got its latest analysis from Jim Cramer, and investors will like what he has to say.

Cramer has flip-flopped his thoughts on Tesla shares many times over the years. One time, he said CEO Elon Musk was a genius; the next, he said Ford stock was a better play. He’s always changing his tune.

However, Cramer’s most recent analysis is of a bullish tone, as he talks about the company’s evolution from an automaker to a tech powerhouse. He made the comments on CNBC’s Mad Money:

“Tesla is morphing right now. It’s in transition from being a car company to being a technology company. You wanna be in there because the tech is worth a lot more than what it’s selling for right now. Don’t care where you bought it, care where it’s going to.”

Tesla has always been looked at by the mainstream media as an automaker. While that is its main business currently, Tesla has always had other divisions: Energy, Solar, Charging, AI, and Robotics. Some came after others, but the important point is that Tesla has not been an automaker exclusively for a decade.

It launched Powerwall and Powerpack in April 2015, marking the start of Tesla Energy.

But Cramer has a point here: Tesla is truly becoming much more than a car company, and it is turning into an AI and overall tech company more than ever before. Eventually, it will be recognized as such, more so than it will be as an automotive company.

Cramer’s comments also follow a recent prediction by Musk, who stated on X that he believes a $150,000 investment in Tesla shares right now would eventually turn someone into a millionaire:

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Musk has said he believes Tesla could be headed to a serious increase in valuation. Eventually, it could become the most valuable company in the world. He said this during the Q2 Earnings Call:

“I do think if Tesla continues to execute well with vehicle autonomy and humanoid robot autonomy, it will be the most valuable company in the world. A lot of execution between here and there. It doesn’t just happen. Provided we execute very well, I think Tesla has a shot at being the most valuable company in the world. Obviously, I am extremely optimistic about the future of the company.”

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