Tesla (NASDAQ: TSLA) shares may rise in price in the coming weeks due to three factors, says Goldman Sachs. These include the upcoming AI Day, and Q3 2022 deliveries and earnings data.
Strategists at Goldman Sachs point to a number of upcoming events that could drive the market for Tesla shares. They say that AI Day on September 30 will play an important role in this. While the mainstream media and general observers will not be able to fully appreciate what is on display, those in the AI industry are sure to be impressed. Tesla CEO Elon Musk announced that this event is primarily intended for recruiting AI and robotics engineers, so it will be highly saturated with technical information. At the same time, it also means that Tesla, as a technology company, continues to develop rapidly and has already achieved high success in the industry, which it is ready to show to the public.
In addition, the third quarter deliveries to be released in early October and an earnings report expected to be released sometime on the 20th of next month are the next two factors driving up TSLA's price.
Goldman automobiles analyst Mark Delaney has even higher expectations than the rest of the Street for Tesla's earnings per share for Q3, based on his belief in “increasing [electric vehicle] demand coupled with Tesla's EV leadership position,” as well as falling cost of goods sold (COGS) per vehicle.
Tesla shares have managed to outperform tech stocks and the S&P 500 in recent months, gaining about 24% in the past three months compared to the S&P's fall of about 3%. According to Wedbush managing director and senior research analyst Dan Ives, the stock’s recent outperformance in the market is due largely to “strong” demand in China, he told Fortune. Ives has a bullish price target of $360 for the stock, roughly 25% above current levels.
During a recent presentation at the Goldman Sachs Communacopia + Technology conference, Martin Viecha, the vice president of investor relations at Tesla, said: “long term demand trends for EVs remain strong” and management “believes supply chain constraints for batteries and chips have eased,” which, according to Delaney, “will help delivery volumes.”
Another potential catalyst for the EV maker is the recently passed Inflation Reduction Act (IRA), which includes tax credits for electric vehicles and aims to “encourage a North America based EV supply chain,” which, according to Delaney, “coupled with [Tesla's] advantage on local manufacturing [versus] peers,” positions them to “benefit more than most auto companies, albeit management maintains it is too soon to quantify the impact of IRA.”
Wedbush’s Ives notes that “deliveries are front and center for the Street: there’s been a lot of noise around demand as well as production coming out of China,” which has become “a big bull/bear debate” for the quarter third. He points out that Tesla’s ramp up of other plants in Germany and Texas could also become “big potential drivers” for the company in 2023.
According to Goldman's Delaney, Tesla is still “well positioned to capture the long-term EV opportunity.”
© 2022, Eva Fox | Tesmanian. All rights reserved.
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