Tesla's stock price is rising fast and confidently. This helps many analysts revise their stock price forecasts. Tesla shares rose 5% to $536.20 on Tuesday at the start of trading. Only in 2020, Tesla shares rose 22%.
New Street’s lead Tesla analyst, Pierre Ferragu, raised his previous forecast from $530 to $800.
1) We increased our $TSLA price target to $800 today. Worth noting, though, our initial target of $530 was set in 2018, so 2 years down the line, compounded 20% p.a., $800 is the right place to be. Not much has changed in our conviction!— Pierre Ferragu (@p_ferragu) January 21, 2020
Now Ferragu claims that the clean technology and leadership of the company compared to other automakers can justify the share price of up to around $1,100-1,700 per share. In particular, according to Ferragu, over the past seven years, Tesla has achieved a 40% improvement in cost, assortment and performance, and Model 3 has a market share in premium cars.
2) Our conviction is simple: beyond 2025, Tesla could sell 2-3m premium cars a year, at industry leading margins, with structural share gains. On our math, it means $1100-1700 per share by then.— Pierre Ferragu (@p_ferragu) January 21, 2020
Given that by the beginning of 2021, stock returns will be between $640 and $960, which justifies an increase in the target price, and is about 56% growth compared to the current price of Tesla shares.
"Discounted back to early 2021, we would see that fully priced with a stock in the $640-960 range. On that basis, we increase our target price to $800."
He wrote that in addition, the company is executing,
"leading gross margins, cash flow positive, and a strong production capacity outlook with Shanghai ramping, Model Y production in Fremont scheduled this summer, and plans for a European factory in place."
However, Ferragu wrote:
3) In the meantime, the stock will remain volatile, as the spread between the bear and the bull cases remain wide. Buckle up for another ride!— Pierre Ferragu (@p_ferragu) January 21, 2020
Short sellers of TSLA shares have been suffering losses for several consecutive months. According to research group S3 Partners, their losses in 2020 alone exceeded $3.27 billion.
In China, consumer interest in Tesla is growing steadily. The government will not cancel the benefits for the purchase of EV, which means that the Chinese market will continue to actively absorb cars produced at Gigafactory 3.
In just a few months, the mass production of the Model Y will begin. Preparatory work for the production will definitely be completed earlier than originally planned by the company.
Tesla acquired land for the future Gigafactory 4 and is already preparing the territory for construction work.
All this will surely help to strengthen a positive interest in the shares of the company.
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