Investor's Corner
Tesla (TSLA) shares currently ‘oversold,’ says Oppenheimer amid $437 price target
Tesla shares (NASDAQ:TSLA) received a vote of confidence on Tuesday, as Oppenheimer analyst Colin Rusch gave an optimistic $437 price target for the electric car maker. The analyst also reiterated his “Outperform” rating for TSLA stock.
Rusch noted that while Tesla shares have plummeted on concerns such as the ongoing US-China trade war and the speculation that demand for its vehicles is decreasing, the electric car maker’s stocks are, at their current state, “oversold.” The Oppenheimer analyst nonetheless stated that Tesla would need to show a strong sell-through in critical markets while improving gross margins to recover from its steep dive.
Also adding to Rusch’s bullish stance on Tesla is the underwhelming nature of competitors that are currently emerging from rival automakers. The emergence of competitors in the premium electric vehicle market is among the key pillars of the TSLA bear thesis, though recent offerings such as the Audi e-tron have largely failed to live up to the standard of Tesla’s vehicles. The e-tron, for example, received an EPA rating of 204 miles per charge from its 95 kWh battery, making it far less efficient than the larger Model X, whose 75 kWh variant is EPA rated for 237 miles per charge.
Oppenheimer analyst Colin Rusch’s positive stance on TSLA stock stands opposite that of Cowen analyst Jeff Osborne, who recently dropped his price target for Tesla shares from $150 to $140 per share. In a note to clients, Osborne, who has held a longtime Sell rating on TSLA, stated that the company’s stock price is beginning to reflect the “lower demand picture in 2020 that we have been forecasting for some time.”
Osborne also noted that there is more room for downside as the “steady state of demand become evident in Q3 2019 when the backlog of lower-priced standard range plus Model 3 is exhausted in Europe and China.”
Tesla shares have been beaten down in recent weeks due to a perfect storm involving multiple bearish takes from Wall Street analysts, the ongoing US-China trade war, a general decline in the auto industry as reflected by the Q1 numbers of veteran automakers such as Jaguar Land Rover and BMW, and the aftermath of the company’s lower-than-expected deliveries and production in the first quarter. Nevertheless, while sentiments on Tesla are currently negative, the electric car maker might make a notable comeback in the second quarter.
In a leaked email from CEO Elon Musk, it was revealed that Tesla might be on track to beat its record 90,700 deliveries in the fourth quarter of 2018, provided that the company could sustain an output of 1,000 Model 3 per day. The leaked email also noted that as of May 21, Tesla has over 50,000 net new orders for the second quarter, further suggesting that the company’s figures for Q2 might pleasantly surprise.
As of writing, Tesla shares are trading -0.31% at $190.01 per share.
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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