Tesla (NASDAQ: TSLA) has received a new raised price target of $1,050 with an Underweight rating from Wall Street firm Morgan Stanley. The electric automaker also has received a revised bull case price target of $2,500 from the investment firm.
Morgan Stanley’s Adam Jonas gave Tesla the increased price target based on a combination of the electric automaker’s growth, its forecast until the year 2030, and the recent release of the Q2 Earnings Call results. Tesla’s Q2 results were announced on Wednesday, July 22.
“It’s becoming increasingly obvious that Tesla is going to become a very large company,” Jonas wrote in a note to investors. “For the first time during our 10 years of coverage, we’re starting to model this company as a very, very large automaker.”
Jonas’ last price target for Tesla was $740, and his previous bull case PT was $2,070.
* TESLA PT RAISED TO $1,050 BY MORGAN STANLEY; BULL CASE RAISED TO $2,500
— David Tayar (@davidtayar5) July 29, 2020
Jonas believes that Tesla could approach and exceed Toyota and Volkswagen’s revenues during the next ten years. Morgan Stanley’s forecasted models that project Tesla’s growth until 2030 indicate that the electric automaker could see around $170 billion of revenues.
If Tesla can make this estimation a reality, it could become “a substantially larger company by revenue than Ford or GM.”
Tesla’s surge in stock price over the past few months has made it the most valuable automaker in the world, surpassing Volkswagen and Toyota. Both companies hold massive valuations based on their worldwide market and popularity.
However, Tesla is beginning to surge into global superstardom as an automaker. The company’s reign as the supreme mass-market automaker started in 2017 when the company unleashed the Tesla Model 3, an affordable sedan with multiple variants that would fit any driver’s range or performance preferences.
Since then, the company has worked to expand its fleet of affordable vehicles, while also offering an array of new styles and body types that will fit the lifestyle or occupation of nearly anyone on Earth.
Jonas stated in his letter to investors that the company’s Q2 results, along with the company’s expanding vehicle fleet, influenced the analyst to restructure Tesla’s revenue model.
“We have restructured our revenue model to include greater model granularity (Cybertruck, Semi, Multipurpose Van, etc.), raising our 2030 volume forecast to 3 million. Our forecasts give Tesla credit for nearly an additional three full factories of production, which we can see as reasonable give the company’s demonstrated strategy of rapid capacity expansion,” he said.
By 2030, Tesla will have at least four production facilities that will be churning out the company’s electric vehicles. The company’s main production facility is located in Fremont, California. However, Tesla’s Giga Shanghai plant is currently manufacturing the Made in China Model 3 and will soon expand to Model Y production.
Additionally, Tesla has two manufacturing plants that are under construction. In Germany, Giga Berlin will be completed in July 2021 and will begin manufacturing the Model Y for the vast European market.
During the Q2 call, CEO Elon Musk indicated that the company had already started construction at its newest U.S.-located production plant, which is located just outside of Austin, Texas.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
H/t: @DavidTayar5 on Twitter