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Tesla (TSLA) stock gets upgraded to “Outperform” at RBC Capital Markets

Credit: @_bennettm_/Twitter

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Tesla stock (NASDAQ:TSLA) may be feeling some pressure on Monday’s intraday, but the electric vehicle maker actually received a rather optimistic outlook from RBC Capital Markets. In recent comments, analyst Joseph Spak raised his rating for Tesla from “Perform” to “Outperform,” though he lowered his price target from $1,175 to $1,100 per share.

It’s not only Tesla that is seeing some pressure today. The broader markets also seem poised to fall sharply over fears related to inflation and the possibility of a recession. Tesla stock, for its part, has declined over 30% this year amid Covid-19-related challenges in China and Elon Musk’s efforts to acquire social media platform Twitter.

According to RBC Capital Markets analyst Joseph Spak, however, Tesla’s second-quarter margins could surprise as investors are already primed for lower delivery figures. So far, analysts polled by Factset are expecting Tesla to deliver about 287,000 vehicles in Q2 2022. That’s quite a bit lower than the company’s results in the first quarter, when Tesla delivered over 310,000 vehicles from January to March 2022.

The following are Spak’s comments:

“Near-term set-up seems favorable. Visible Alpha 2Q22 consensus delivery forecast is 279k units, though we believe the buyside expects a ~250k print effectively in line with our new 249k forecast. With investors primed for lower deliveries, we believe 2Q22 margins can surprise to upside.

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“1Q22 auto GM ex-credits was 30% and walking q/q lower volume, higher depreciation weigh, but pricing can offset (see our walk inside). We forecast 2Q22 auto GM ex-credits at ~28.6%. Visible Alpha consensus 2Q22 auto gross margins ex-credits is 26.4%, but that is also built on that 279k unit forecast which is likely to come down.”

“So we see the potential for low margin expectations and hence a margin beat. Looking ahead, we are positive as well. For 3Q22, RBC i s at 396k deliveries vs. consensus at 378k, and we see 2H22 auto gross margins >30% as Shanghai gets back to pace, Berlin and Texas ramp, and pricing gains continue,” the analyst noted.

RBC credited Tesla’s efforts to secure critical materials that it would need to ramp its operations to a significant scale. The firm also cited Elon Musk’s Master Plan Part 3, which seems focused on scaling Tesla to such a degree that it could have a notable effect on the world as a whole.

“(Tesla’s) early focus on vertical integration (not just batteries/raw materials but also motors, semis, software) is likely to pay off especially as industry supply of critical materials may become an issue in 2027/28 and TSLA may be able to control more of their own destiny.

“Indeed, it appears Elon’s Master Plan Part 3 is likely to focus on achieving very large scale to shift the transportation/energy infrastructure. TSLA earnings and cash generation over the coming years, in addition to their ability to use their stock as currency, can help them build out and secure materials giving them a strong competitive advantage,” RBC noted.

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Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Tesla called ‘biggest meme stock we’ve ever seen’ by Yale associate dean

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Credit: Tesla

Tesla (NASDAQ: TSLA) is being called “the biggest meme stock we’ve ever seen” by Yale School of Management Senior Associate Dean Jeff Sonnenfeld, who made the comments in a recent interview with CNBC.

Sonnenfeld’s comments echo those of many of the company’s skeptics, who argue that its price-to-earnings ratio is far too high when compared to other companies also in the tech industry. Tesla is often compared to companies like Apple, Nvidia, and Microsoft when these types of discussions come up.

Fundamentally, yes, Tesla does trade at a P/E level that is significantly above that of any comparable company.

However, it is worth mentioning that Tesla is not traded like a typical company, either.

Here’s what Sonnenfeld said regarding Tesla:

“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.”

Many analysts have admitted in the past that they believe Tesla is an untraditional stock in the sense that many analysts trade it based on narrative and not fundamentals. Ryan Brinkman of J.P. Morgan once said:

“Tesla shares continue to strike us as having become completely divorced from the fundamentals.”

Dan Nathan, another notorious skeptic of Tesla shares, recently turned bullish on the stock because of “technicals and sentiment.” He said just last week:

“I think from a trading perspective, it looks very interesting.”

Nathan said Tesla shares show signs of strength moving forward, including holding its 200-day moving average and holding against current resistance levels.

Sonnenfeld’s synopsis of Tesla shares points out that there might be “a little too much emphasis on the magic wand of Musk.”

Elon Musk just bought $1 billion in Tesla stock, his biggest purchase ever

This could refer to different things: perhaps his recent $1 billion stock buy, which sent the stock skyrocketing, or the fact that many Tesla investors are fans and owners who do not buy and sell on numbers, but rather on news that Musk might report himself.

Tesla is trading around $423.76 at the time of publication, as of 3:25 p.m. on the East Coast.

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Elon Musk affirms Tesla commitment and grueling work schedule: “Daddy is very much home”

The remarks came as Tesla shares crossed the $400 mark on the stock market.

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Tesla CEO Elon Musk reiterated his commitment to the electric vehicle maker and its future projects this week, responding to speculation following his $1 billion purchase of TSLA stock. 

The remarks came as Tesla shares crossed the $400 mark on the stock market, extending a rally fueled in part by Musk’s TSLA purchase.

Elon Musk’s nonstop work schedule

Amidst the reaction of TSLA stock to Musk’s $1 billion investment, Tesla owners such as @greggertruck noted that “Daddy’s home.” Musk replied, stating that “Daddy is very much home.” He then shared details of a packed weekend of work, which was definitely grueling but completely within character for a “wartime CEO.”

Musk did note, however, that he had lunch with his kids during the weekend despite his extremely busy schedule.

“Daddy is very much home. Am burning the midnight oil with Optimus engineering on Friday night, then redeye overnight to Austin arriving 5am, wake up to have lunch with my kids and then spend all Saturday afternoon in deep technical reviews for the Tesla AI5 chip design. 

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“Fly to Colossus II on Monday to walk the whole datacenter floor, review transformers and power production (excellent progress), depart midnight. Then up to 12 hours of back-to-back meetings across all Tesla departments, but with a particular focus on AI/Autopilot, Optimus production plans, and vehicle production/delivery,” Musk wrote in his post

Wartime CEO

Wedbush analyst Dan Ives described Musk as operating in “wartime CEO mode,” highlighting autonomous driving and AI as a trillion-dollar market opportunity for Tesla. Musk reiterated this point late last month as well, when he outlined the several projects he is juggling among his numerous companies. At the time, Musk stated that he was busy with Starship 10, Grok 5, and Tesla V14. This was despite his notable presence on X. 

With Tesla Master Plan Part IV being partly released, the company is entering what could very well be its most ambitious stage to date. To usher in an era of sustainable abundance, Tesla would definitely require a “wartime CEO,” someone who could remain locked in and determined to push through any obstacles to ensure that the company achieves its goals.

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Tesla analyst says Musk stock buy should send this signal to investors

“With Musk’s (Tesla stock) purchase, combined with the upward momentum for delivery expectations and robotaxi rollout, we are becoming more bullish.”

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(Credit: Tesla)

Tesla CEO Elon Musk purchased roughly $1 billion in Tesla shares on Friday, and analysts are now breaking down the move as the stock is headed upward.

One of them is William Blair analyst Jed Dorsheimer, who said in a new note to investors on Monday that Musk’s move should send a signal of confidence to stock buyers, especially considering the company’s numerous catalysts that currently exist.

Elon Musk just bought $1 billion in Tesla stock, his biggest purchase ever

Dorsheimer said in the note:

“With Musk’s (Tesla stock) purchase, combined with the upward momentum for delivery expectations and robotaxi rollout, we are becoming more bullish. This purchase is Musk’s first buy since 2020. To us, this sends a strong signal of confidence in the most important part of Tesla’s future business, robotaxi.”

Musk putting an additional $1 billion back into the company in the form of more stock ownership is obviously a huge vote of confidence.

He knows more than anyone about the progress Tesla has made and is making on the Robotaxi platform, as well as the company’s ongoing efforts to solve vehicle autonomy. If he’s buying stock, it is more than likely a good sign.

Tesla has continued to expand its Robotaxi platform in a number of ways. The project has gotten bigger in terms of service area, vehicle fleet, and testing population. Tesla has also recently received a permit to test in Nevada, unlocking the potential to expand into a brand-new state for the company.

In the note, Dorsheimer also touched on Musk’s recent pay package, revealing that William Blair recently met with Tesla’s Board of Directors, who gave the firm some more color on the situation:

“We recently participated in a meeting with Tesla’s board of directors to discuss the details of Musk’s performance package. The board is confident of its position in the Delaware case and anticipates a verdict by end of year. It does not expect a similar situation to occur under new Texas jurisdiction. Musk has the board’s full support, and we expect he’ll get more than enough shareholder support for this to pass with flying colors.”

Tesla stock is up over 6 percent so far today, trading at $421.50 at the time of publication.

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