Investor's Corner
Tesla’s strong August start confidently brings in reiterated support from Piper Sandler
Tesla’s (NASDAQ: TSLA) stock has experienced a positive August thus far, despite being only three days into the month. Just a week after Tesla reported positive earnings for Q2, Piper Sandler analysts Alex Potter and Winnie Dong are reiterating their support for the automaker’s stock, solidifying their belief that Tesla is primed to navigate competition in 2022 successfully.
The note, released on August 3rd, outlines Piper Sandler’s recent examination of the 10-Q filing Tesla submitted to the SEC. Following the 10-Q’s public release and synopsis last week, Piper Sandler said that “nothing fishy” pops out, and automotive margins were impressive past anyone’s scope of prediction. Additionally, Tesla stated in the document that it could recognize $1.3 billion in self-driving software within the next 12 months. Contributing to an already impressive gross margin that fueled Tesla’s eighth-consecutive profitable quarter, the analysts suggest that margin could exceed the mid 20’s.
The outlook for Tesla moving forward is strong, especially as the company has the most robust products, and battery electric vehicle adoption continues to rise in nearly every region worldwide. The note indicates that the span of 2022-2025 should be the strongest span for the adoption of EVs due to more manufacturers committing to the production of their initial electric models. The note indicates that Tesla is primed to navigate and accomplish increased vehicle production and delivery volume based on widespread EV adoption. “Tesla is still the driving force behind higher BEV penetration globally,” the note says. Tesla holds 67% of all BEV sales in the U.S. in 2021. The company ranks #2 in China, only trailing the Wuling-GM-SAIC conglomerate that produces the HongGuang Mini EV.
Sure ??$TSLA https://t.co/BfbBlsz3gK pic.twitter.com/TOYaNIAwzz
— David Tayar (@davidtayar5) August 3, 2021
In Europe, Tesla ranks #2 as well, with 13% of EVs sold in the region. However, this is without the Model Y, Tesla’s most popular vehicle, which will be manufactured at the Giga Berlin production facility later this year. With the crossover SUV style being the most popular body style in Europe, the Model Y could help Tesla to displace Volkswagen as the current king of the BEV market in Europe, fueled by the ID.3 and ID.4.
Changes to Tesla’s 2021 Outlook
Due to lower deliveries, Piper Sandler took down their revenue estimates and modified delivery expectations. The analysts believe that Tesla will achieve 846,000 deliveries this year. With Tesla being close to halfway there after quarters of 184,800 and 201,250, delivery figures are likely to increase on a quarter-over-quarter basis. With Giga Berlin and Giga Texas expected to start production before the end of the year, 846,000 units is certainly a figure within reach if all goes according to plan.
Tesla Model 3 Standard Range Plus becomes even more competitive in China
The note also identifies several “risks to achievement of price target and recommendation,” listing several things that could move Tesla’s price target downward. These are production delays, failure to meet customer expectations, defects and recalls, supply chain disruptions, and slow adoption of electric vehicles. While all realistic negatives, Tesla has done a good job of navigating through the global semiconductor shortage that has plagued most car companies globally. In its Q2 2021 Update Letter, Tesla said that it designed 19 different semiconductors and controllers to navigate through the shortages. Additionally, build quality and product builds have improved over the last several years, and the adoption of electric vehicles, while slow, is not something that seems to be a worry based on growing adoption numbers in some countries.
Piper Sandler maintains its Overweight rating and the $1,200 price target it has had on the stock since early this year.
At the time of writing, Tesla stock was trading at $708.38, down just over $1.
Disclosure: Joey Klender is a TSLA Shareholder.
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.
Tesla (TSLA) receives “Buy” rating and $551 PT from Canaccord Genuity
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