Investor's Corner
Tesla (TSLA) bull and ARK founder shows where Wall St goes wrong
Tesla (NASDAQ: TSLA) stock fell last week unexpectedly after the company’s Battery Day event. But Cathie Wood, a TSLA bull and the founder of ARK Invest, broke down Wall Street’s response and showed why analysts misunderstood some of the electric automaker’s revealings at the event.
Wood, who currently holds the CEO and CIO positions at ARK, broke down several mishaps that Wall Street analysts made during their post-Battery Day evaluations. ARK is one of the biggest bulls of TSLA globally, and the firm loaded up on stock following the event.
New Vehicle with a Lower Price
Wood indicated that when traditional automakers announce price cuts to current vehicles, it usually means that there is trouble. “Higher inventories and lower sales,” Wood wrote in a Tweet. However, Musk and Tesla did not unveil a lower price or discount on a current model. The company announced that within a few years, it would have another vehicle available for purchase, which would be sold for $25,000. This development leads to the indication that Tesla is beginning to reach price parity with gas cars.
Tesla’s broad range of expertise
Tesla is not just a car company, and many analysts forget to factor in its energy business and its software expertise in its valuation. While Battery Day was obviously about the company’s cells, it is not the only thing going on in Tesla’s world. Analysts who are following TSLA must be aware that EVs and ICEs are two different worlds, and they should be experts in more than just gas-powered cars as the market changes.
Wood notes that “Analysts following $TSLA should be expert in energy storage, robotics, artificial intelligence, and software-as-service. While they are expert at the internal combustion engine, traditional auto analysts are not equipped to analyze EVs, particularly $TSLA.”
The fact is, the EV market is substantially different from the ICE market, and trends are significantly different. Tesla also sells its vehicles in a completely different manner than the traditional automakers do. Tesla does not do sales, promotions, or even use dealerships to sell cars. All vehicles are sold for the same price, eliminating the stress of the car-buying experience.
A skyrocketing EV industry, which Tesla leads
Tesla is leading the charge in the accelerating expansion of the EV market, and the next several years will show that the world’s drivers are leaning toward electric transportation. “According to @skorusARK‘s battery research, #EV sales will scale nearly 20-fold from roughly 1.8 million last year to 35 million, 40% of total global auto sales, during the next five to six years.”
Tesla also expects to grow exponentially over the next few years thanks to more production facilities, more efficient manufacturing, and more affordable models. The company plans to deliver 500,000 cars this year but has its sights set on 20 million vehicles worldwide by 2030.
The declining automotive industry has not seen exponential growth in around 100 years, Wood writes. Since the EV market has expanded, ARK expects an exponential growth territory for the sector for at least five to ten years.
Despite Wall Street’s unexpected decline of TSLA shares last week following Battery Day, the company is beginning to regain some of the momentum it felt during mid-September. As of now, TSLA stock has recovered from the post-Battery Day dip, which saw shares fall to around $380 apiece. At the time of writing, TSLA was trading at $420.10, up $12.76 during the Monday session.
Disclaimer: Joey Klender is a TSLA Shareholder.
Investor's Corner
Barclays lifts Tesla price target ahead of Q3 earnings amid AI momentum
Analyst Dan Levy adjusted his price target for TSLA stock from $275 to $350, while maintaining an “Equal Weight” rating for the EV maker.
Barclays has raised its price target for Tesla stock (NASDAQ: TSLA), with the firm’s analysts stating that the electric vehicle maker is approaching its Q3 earnings with two contrasting “stories.”
Analyst Dan Levy adjusted his price target for TSLA stock from $275 to $350, while maintaining an “Equal Weight” rating for the EV maker.
Tesla’s AI and autonomy narrative
Levy told investors that Tesla’s “accelerating autonomous and AI narrative,” amplified by CEO Elon Musk’s proposed compensation package, is energizing market sentiment. The analyst stated that expectations for a Q3 earnings-per-share beat are supported by improved vehicle delivery volumes and stronger-than-expected gross margins, as noted in a TipRanks report.
Tesla has been increasingly positioning itself as an AI-driven company, with Elon Musk frequently emphasizing the long-term potential of its Full Self-Driving (FSD) software and products like Optimus, both of which are heavily driven by AI. The company’s AI focus has also drawn the support of key companies like Nvidia, one of the world’s largest companies today.
Still cautious on TSLA
Despite bullish AI sentiments, Barclays maintained its caution on Tesla’s underlying business metrics. Levy described the firm’s stance as “leaning neutral to slightly negative” heading into the Q3 earnings call, citing concerns about near-term fundamentals of the electric vehicle maker.
Barclays is not the only firm that has expressed its concerns about TSLA stock recently. As per previous reports, BNP Paribas Exane also shared an “Underperform” rating on the company due to its two biggest products, the Robotaxi and Optimus, still generating “zero sales today, yet inform ~75% of our ~$1.02 trillion price target.” BNP Paribas, however, also estimated that Tesla will have an estimated 525,000 active Robotaxis by 2030, 17 million cumulative Optimus robot deliveries by 2040, and more than 11 million FSD subscriptions by 2030.
Investor's Corner
BNP Paribas Exane initiates Tesla coverage with “Underperform” rating
The firm’s projections for Tesla still include an estimated 525,000 active Robotaxis by 2030.
Tesla (NASDAQ: TSLA) has received a bearish call from BNP Paribas Exane, which initiated coverage on the stock with an Underperform rating and a $307 price target, about 30% below current levels.
The firm’s analysts argued that Tesla’s valuation is driven heavily by artificial intelligence ventures such as the Robotaxi and Optimus, which are both still not producing any sales today.
Tesla’s valuation
In its note, BNP Paribas Exane stated that Tesla’s two AI-led programs, the Robotaxi and Optimus robots, generate “zero sales today, yet inform ~75% of our ~$1.02 trillion price target.” The research firm’s model projected a maximum bull-case valuation of $2.7 trillion through 2040, but after discounting milestone probabilities, its base-case valuation remained at $1.02 trillion.
The analysts described their outlook as optimistic toward Tesla’s AI ventures but cautioned that the stock’s “unfavorable risk/reward is clear,” adding that consensus earnings expectations for 2026 remain too high. Tesla’s market cap currently stands around $1.44 trillion with a trailing twelve-month revenue of $92.7 billion, which BNP Paribas argued does not justify Tesla’s P/E ratio of 258.59, as noted in an Investing.com report.
Tesla and its peers
BNP Paribas Exane’s report also included a comparative study of the “Magnificent Seven,” finding Tesla’s current market valuation as rather aggressive. “Our unique comparative analysis of the ‘Mag 7’ reveals the extreme nature of TSLA’s valuation, as the market implicitly says TSLA’s 2035 earnings (~55% of which will be driven by Robotaxi & Optimus, w/ zero sales now) have the same level of risk & value-appropriation as the ‘Mag 6’s’ 2026 earnings,” the firm noted.
The firm’s projections for Tesla include an estimated 525,000 active Robotaxis by 2030, 17 million cumulative Optimus robot deliveries by 2040 priced above $20,000 each, and more than 11 million Full Self-Driving subscriptions by 2030. Interestingly enough, these seem to be rather optimistic projections for one of the electric vehicle maker’s more bearish estimates today.
Tesla (NASDAQ: TSLA) had coverage initiated on it by a new firm this week, and analysts said that the company’s comfort level with taking risks makes it a “must own” for investors.
Melius Research and analyst Rob Wertheimer initiated coverage of the stock this week with a $520 price target and a “Buy” rating. The price target is about 20 percent higher than the current trading price as shares closed at $435 on Wednesday, up 1.38 percent on the day.
Wertheimer said in the note to investors that introduced their opinion on Tesla shares that the company has a lot going for it, including a prowess in AI, domination in its automotive division, and an incredible expertise in manufacturing and supply chain.
He wrote:
“We see Tesla shares as a must-own. The disruptive force of AI will wreck multitrillion-dollar industries, starting with auto. Under Musk’s leadership, the company is comfortable taking risks. It has manufacturing scale and supply chain expertise that robotics startups possess more by proxy. It can rapidly improve and scale autonomy in driving, the first major manifestation of AI in the physical world.”
However, there were some drawbacks to the stock, according to Wertheimer, including its valuation, which he believes is “challenging” given its fundamentals. He said the $1 trillion market cap that the company represented was “guesswork,” and not necessarily something that could be outlined on paper.
This has been discussed by other analysts in the past, too. Yale School of Management Senior Associate Dean Jeff Sonnenfeld recently called Tesla the “biggest meme stock we’ve ever seen,” by stating:
“This is the biggest meme stock we’ve ever seen. Even at its peak, Amazon was nowhere near this level. The PE on this, well above 200, is just crazy. When you’ve got stocks like Nvidia, the price-earnings ratio is around 25 or 30, and Apple is maybe 35 or 36, Microsoft around the same. I mean, this is way out of line to be at a 220 PE. It’s crazy, and they’ve, I think, put a little too much emphasis on the magic wand of Musk.”
Additionally, J.P. Morgan’s Ryan Brinkman said:
“Tesla shares continue to strike us as having become completely divorced from the fundamentals.”
Some analysts covering Tesla have said they believe the stock is traded on narrative and not necessarily fundamentals.
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