Strategists at Bank of America believe Tesla sales will rise this year thanks to the recent decline in car prices. The Street expects growth to be 17%, but BofA's new forecast suggests growth of 53%.
Tesla's recent price cuts for its vehicles will lead to higher sales growth in 2023, according to Bank of America (BofA). BofA strategists stressed that while this would cut margins, the move could lead to a 53% increase in sales this year, according to Markets Insider. This is more than three times the Wall Street firm's prior estimate of 17% and puts the company above its personal annual growth goal of 50%. At the same time, the price target was slightly reduced to $130 per share from $135 previously.
“This pushes revenue to $100bn in 2023, up 18% from our prior model,” the strategists wrote. “Based on the adverse impact of price cuts offset by an average incremental margin on the increase in sales that we estimate at 30%, our earnings estimates move moderately lower in 2023 and our price objective is now $130 (was $135).”
Like other car companies, Tesla is facing short-term headwinds, including an unfavorable macroeconomic environment with higher interest rates and a looming recession, as well as potential risks to the broader electric vehicle market. However, strategists noted that the company's self-financing status is unique among EV competitors.
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Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.