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Tesla (TSLA) stock continued to rally again on Thursday, closing at US$1,394.28, up by 2.08%. TSLA’s mark cap is currently US$258.60 billion, after growing 233% yeart-to-date. Tesla might reach a new record-high after the board releases its financial results for Q2 2020.
Dan Ives from Wedbush, Brian Johnson from Barclays, and Colin Rusch from Oppenheimer talked about Tesla’s recent stock gains and the EV automaker’s financial growth. The analysts' notes reflect the conflicting opinions that surround TSLA stock and its skyrocketing price.
Dan Ives - Wedbush Managing Director of Equity Research
Dan Ives from Wedbush seemed hesitant about TSLA’s rise and was filled with questions about the company’s fundamentals. He was mainly concerned about Tesla’s profitability.
“It all comes down to the P word: profitability,” Ives told CNBC. “What’s the fundamental value? If you have a million-mile battery, what does that add to the stock?...It comes down to scarcity. How do you play the EV market?
Tesla has tentatively scheduled Battery Day for September. The company is expected to reveal its million-mile battery during Battery Day, which could be a game-changer for Tesla’s all-electric vehicles.
As for the scarcity Ives mentioned, Loup Ventures Gene Munster might have an answer. Munster noted that Tesla currently had about 80 percent of the electric car market in the United States alone, giving it an advantage when—or if—legacy automakers ever decide to join the EV segment.
“We can also fast-forward to 5 to 10 years from now [when] there will be much more electric cars. About 3% of total cars so globally—today—are electric but undoubtedly that number will go to 100% at some point in the future. It’s simply a better way to move around and Tesla has an advantage,” Munster told CNBC’s Fast Money host.
Brian Johnson, Barclays Senior Autos Analyst
Barclays’ Brian Johnson thought that Tesla’s make-or-break moment would come later this year.
“We think the reckoning that there is going to be could be more when we get to the second half and the fourth quarter ... If this were a real growth stock, we’d actually be talking about things like same-country, same-model sales, and so if you back out China from this quarter, back it out from a year-ago quarter, the rest of the world shrunk 28%. Now of course there’s Covid, of course there’s challenges, but that isn’t that different from many of the legacy automakers.”
Tesla China contributed to the company’s financial results significantly in Q1 2020 and it appears it will do the same in Q2 2020. Giga Shanghai’s Model 3 vehicle sales made up 23% of China’s EV market in June, based on a previous Tesmanian article. China’s overall EV market showed a negative growth of 34.9% while Tesla sales went up by 35% from May.
Giga Shanghai has ramped production since Q2, possibly exceeding 4,000 vehicles per week. Inside sources told Tesmanian that production has ramped since Giga Shanghai solved its battery bottleneck issue. At the rate production and construction has ramped, Giga Shanghai is expected to start pre-production of the Model Y by the end of the year.
Colin Rusch, Oppenheimer Managing Director, and Senior Research Analyst
Colin Rusch from Oppenheimer seemed to see Tesla’s room growth for years to come.
“We’re really going back to our numbers. It’s run aggressively past our price target that was $968. We put that in place over a quarter ago, and as we look at what the company has planned out for 2024 and 2025, you know, we see the potential for 50% to 70% upside,” he said.
Most TSLA bulls would probably agree with Rusch. For instance, ARK Invest’s Cathie Wood and Social Capital CEO Chamath Palihapitiya also see Tesla’s potential for growth.
Tesla still has many projects that have not reached their full potential. For example, it hasn’t released its feature-complete Full Self-Driving package yet, which is only a sliver of FSD's entire capabilities. Tesla Energy hasn’t fully ramped Solar Roof V3 installations or actually started its utility projects yet either. It just received electricity generation licenses in the United Kingdom and Australia.
There is also Tesla’s side project making microfactories for CureVac, a German biotech company developing an mRNA-based vaccine for COVID-19. Given all its projects, it would be easy to see why TSLA bulls believe the company still has room for growth.
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This article is for informational purposes only. You should not construe any such information or other material as an investment, financial, or other advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Ma. Claribelle Deveza, Tesmanian, or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.
Ma. Claribelle Deveza holds zero share of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.
About the Author
Ma. Claribelle Deveza
Longtime writer and news/book editor. Writing about Tesla allows me to contribute something good to the world, while doing something I love.