Investor's Corner

Tesla (TSLA) stock is a “Buy” as Elon Musk prepares his Master Plan Part 3: Jefferies

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Jefferies analyst Philippe Houchois seems confident that Tesla will maintain its leading position in the EV industry, even with the mounting issues companies in the auto market are facing. Houchois believes that Elon Musk’s Master Plan Part 3 will be instrumental in Tesla’s continued success. 

“We have been trimming estimates across our OEM coverage, but we are raising them at Tesla on price increases more than compensating risk from volume and battery cost inflation. With cash accumulating at a faster pace than Tesla’s ability to grow physically, we look forward to Elon Musk revealing Master Plan Part 3,” Houchois noted. 

Houchois’ confident take on Tesla’s ongoing and future success stems from the EV automaker’s positive message during Jefferies’ recent auto conference. The analyst predicts that Part 3 of Elon Musk’s Master Plan will “extend beyond financing, storage, and FSD, as these would barely dent a fast-growing cash pile.” 

The Jefferies analyst maintains a “Buy” rating for TSLA, but has lowered his price target from $1,400 to $1,250. Houchois lowered his price target after taking into account the “riskier macro and geopolitical environment for the valuation.” 

Currently, companies are still struggling with the supply chain challenges that surfaced when the global chip shortage started. Earlier this month, Elon Musk revealed Tesla was seeing significant inflation pressure in raw materials and logistics. 

Jefferies noted that Tesla’s recent price hikes might have mitigated some supply chain challenges. Tesla has increased the price of its vehicles twice in the last few weeks. 

However, Tesla seems to be adapting well to supply chain issues, likely because it has experience dealing with tough challenges as a company made of startups. The company has shown that it is adept at assessing the situation and pivoting when necessary to continue delivering products despite mounting issues out of its control. Tesla also appears to be good at anticipating future challenges and preparing for them beforehand.

Tesla’s gigafactories are a prime example of the company’s flexibility. Tesla Giga Berlin will deliver its first batch of Model Y vehicles on March 22. Tesla Giga Texas follow suit soon after. Giga Shanghai, the factory that ramped Tesla’s international growth, is still expanding and aims to reach 1 million units per year by the end of 2022. The Fremont Factory is still expanding as well. 

Tesla isn’t done building Gigafactories either. Later this year, Tesla expects to announce the location of yet another Gigafactory. 

The Teslarati team would appreciate hearing from you. If you have any tips, reach out to me at [email protected] or via Twitter @Writer_01001101

Tesla (TSLA) stock is a “Buy” as Elon Musk prepares his Master Plan Part 3: Jefferies
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