Investor's Corner
Tesla shareholders will prosper, says veteran Wall St. analyst
Tesla shares (NASDAQ:TSLA) have seen a drop recently amidst last week’s reveal of the Model Y SUV and Elon Musk’s ongoing skirmish with the Securities and Exchange Commission (SEC). Despite these headwinds, Loup Ventures managing partner Gene Munster believes that the company will likely survive and thrive after it overcomes these recent challenges.
In a recent post, the 23-year finance veteran noted that while Tesla’s Q1 results and performance are still up in the air due to swing factors such as vehicles in transit, demand, and profitability, the company’s long-term view remains intact. Munster added that he believes patient TSLA investors will be rewarded in the future, as Tesla’s long-term strategy unravels.
“We believe Tesla will survive because we expect the company can continue to raise money based on their lead in undeniable long-term growth opportunities including EVs, autonomy, and renewable energy. We continue to believe that over the long-term Tesla will prosper, and patient shareholders will be rewarded. The electrification of vehicles is undeniable, and Tesla’s participation in that EV future is crucial given its leading family of vehicles along with optionality around energy capture/storage products and autonomous driving,” Munster wrote.
Munster is not alone in his continued support for Tesla. The electric car maker’s shares dipped sharply following the Model Y event, with the company’s critics coming out in full force to express their skepticism for the vehicle and its effects on Tesla’s business. Despite these reservations, a number of analysts have remained firm in their positive outlook for the electric car maker.
Canaccord Genuity analyst Jed Dorsheimer maintained a Buy rating and a $450 price target for Tesla stock. Dorsheimer wrote that “we suspect the strategy with the Y will follow a similar trajectory to the 3, skimming the high end of the market with more profitable sales, as the company works to bring costs down and then in 2021 introduce more mainstream price points to drive a further competitive lead over traditional internal-combustion-based vehicles.”
Baird analyst Ben Kallo, a longtime Tesla bull, also kept his Outperform rating and $465 price target for the company. Kallo argues that “sales of the Model Y should be supported by [a] growing market for premium/luxury crossovers and SUV. We estimate the U.S. market to be over 1.5 million vehicles annually, based on historical sales.” Daniel Ives of Wedbush further asserted his Outperform rating and $390 price target on Tesla, stating that “while some have argued that the production of Model Y could potentially cannibalize Model 3 deliveries, in our opinion this is a smart and strategic move by Musk & Co. as they aim to further their leadership position in the electric vehicle market by now going after the hot SUV crossover market.”
Tesla shares are currently weighed down by several potential factors, one of which is Elon Musk’s continued clashes with the SEC. The agency had requested that Musk be held in contempt of court over his tweet last February 19, when he noted that Tesla would produce “around 500,000 cars in 2019.” The SEC argued that Musk’s tweet violated the settlement that it reached with the CEO last year following the now-infamous “funding secured” fiasco. Musk’s legal team has fought back, alleging that the agency is over-reaching in its efforts against the CEO.
Despite concerns about the Model Y and Elon Musk’s SEC troubles, Tesla’s numbers in the first quarter might prove to be a pleasant surprise. Elon Musk has noted that the first quarter would likely be unprofitable, though the mass deliveries of the Model 3 to Europe and China, as well as the push for the $35,000 Model 3 in the United States, might make a difference for the company’s numbers. Coupled with a recently leaked message hinting that Tesla is urging its employees to help deliver vehicles until the end of the month, the electric car maker’s Q1 2019 performance might prove better than expected.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
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.
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