Investor's Corner
Tesla (TSLA) gets more bullish outlook from Wall St. amid go-private initiative
Wall Street analysts covering Tesla (NASDAQ:TSLA) are starting to show a more bullish outlook towards the electric car maker. Since Tesla posted its Q2 financial results on August 1, analysts have upped their earnings estimates for the company, taking forecasts for 2019 up by more than 68%.
Mott Capital Management founder Michael Kramer notes that the improving outlook among Wall St. analysts comes as Tesla continues the production ramp of the Model 3. In the company’s Q2 earnings call, Elon Musk noted that Tesla was able to sustain the Model 3’s 5,000/week production rate during “multiple weeks” in July. Encouraging signs about the Model 3 ramp continued to emerge this week as well, after Tesla registered more than 16,000 new VINs for the electric car in a seven-day period. Bloomberg‘s Model 3 tracker, which has gotten more accurate over the past few months, also estimates the production of the vehicle to be at over 5,800 per week.
After August 1, analysts have narrowed their losses for the company in 2018 from $6.79 to $5.85. Revenue estimates for the full year were also revised higher by 4%, and are now seen rising by almost 74% versus the past year to $20.5 billion. Revenue estimates before August 1 among Wall St. analysts were at $19.5 billion. Apart from this, earnings estimates from Wall St. became more bullish since August started, with analysts now forecasting earnings to rise by more than 68% to $2.83 from $1.73. This signified the first time that analysts upped their forecast for next year.
While Wall St. analysts still believe that Tesla stock may be currently overvalued, the average price target for the company has been raised to $321.40, which is roughly 10% below the current price of the stock. This represents a nearly 13% average price increase since the end of July. Kramer noted that among 28 analysts covering Tesla, 32% currently have a Buy or Outperform rating on the company, while 36% have a Sell or Underperform rating. Among these is Oppenheimer analyst Colin Rusch, who upgraded Tesla from Perform to Outperform and set a price target of $385 after the company’s Q2 earnings call.
“While we have been cautious on Model 3 ramp, we believe gross-margin performance on Model 3 will carry the stock over the next 12 months,. With higher volumes and slower spending, we believe Tesla has reached a critical inflection point in its development,” Rusch wrote in a report to clients.
Tesla stock continues to be a battleground between the company’s supporters and critics. Since Elon Musk dropped a bombshell announcement last week about the possibility of Tesla going private, the company’s stock has proven to be volatile. After Musk’s announcement last Tuesday, TSLA ended the day at $379.58 per share. Tesla stock has since dropped back to the $350 range, ending Monday at $356.41 per share, despite Elon Musk releasing a follow-up blog post explaining why he announced that funding for Tesla’s privatization had been “secured.”
Amidst the controversy surrounding Musk’s announcement, fellow billionaire Mark Cuban, who owns the NBA’s Dallas Mavericks, expressed his support for Musk. In an interview with CNBC, Cuban noted that Musk’s unorthodox business decisions, as well as his eccentric behavior, are things that contribute to Tesla’s potential.
“When you invest in an entrepreneur, you get the personality. This is a guy who is sleeping in the factory. This is a guy who is pushing, pushing, pushing. I would tell shareholders ‘be grateful that you have somebody that committed to the company,’ and recognize that being unique is what has helped make Tesla so successful,” Cuban said.
Tesla has formed a special committee to evaluate proposals for the company’s privatization. The committee, comprised of Brad Buss, Robyn Denholm and Linda Johnson Rice, who are independent directors, has noted that it is waiting to receive a formal proposal from Elon Musk as of Tuesday morning.
As of writing, Tesla stock is trading at -1.06% at $352.90 per share.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
Investor's Corner
Tesla is ‘better-positioned’ as a company and as a stock as tariff situation escalates
Tesla is “better-positioned” as a company and as a stock as the tariff situation between the United States, Mexico, and Canada continues to escalate as President Donald Trump announced sanctions against those countries.
Analysts at Piper Sandler are unconcerned regarding Tesla’s position as a high-level stock holding as the tariff drama continues to unfold. This is mostly due to its reputation as a vehicle manufacturer in the domestic market, especially as it holds a distinct advantage of having some of the most American-made vehicles in the country.
Analysts at the firm, led by Alexander Potter, said Tesla is “one of the most defensive stocks” in the automotive sector as the tariff situation continues.
The defensive play comes from the nature of the stock, which should not be too impacted from a U.S. standpoint because of its focus on building vehicles and sourcing parts from manufacturers and companies based in the United States. Tesla has held the distinct title of having several of the most American-made cars, based on annual studies from Cars.com.
Its most recent study, released in June 2024, showed that the Model Y, Model S, and Model X are three of the top ten vehicles with the most U.S.-based manufacturing.
Tesla captures three spots in Cars.com’s American-Made Index, only U.S. manufacturer in list
The year prior, Tesla swept the top four spots of the study.
Piper Sandler analysts highlighted this point in a new note on Monday morning amidst increasing tension between the U.S. and Canada, as Mexico has already started to work with the Trump Administration on a solution:
“Tesla assembles five vehicles in the U.S., and all five rank among the most American-made cars.”
However, with that being said, there is certainly the potential for things to get tougher. The analysts believe that Tesla, while potentially impacted, will be in a better position than most companies because of their domestic position:
“If nothing changes in the next few days, tariffs will almost certainly deal a crippling blow to automotive supply chains in North America. [There is a possibility that] Trump capitulates in some way (perhaps he’ll delay implementation, in an effort to save face).”
There is no evidence that Tesla will be completely bulletproof when it comes to these potential impacts. However, it is definitely better insulated than other companies.
Need accessories for your Tesla? Check out the Teslarati Marketplace:
- https://shop.teslarati.com/collections/tesla-cybertruck-accessories
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Tesla (NASDAQ: TSLA) received a price target boost from analysts at Truist Securities, but it came with some criticisms based on a lack of information on several things that investors were excited to hear about regarding future vehicles and AI achievements.
Last night, Tesla reported its earnings from the fourth quarter of 2024, and while it had a very tempered financial showing, missing most of the Wall Street targets that were set for it, the stock was up after hours and on Thursday due to the details the company released regarding its plans for 2025.
CEO Elon Musk stunned listeners last night by revealing plans to launch unsupervised Full Self-Driving as a service in Austin in June 2025. It will be the first time Tesla will offer driverless FSD rides in public, something it has been working with the City of Austin on since December.
Tesla to launch unsupervised Full Self-Driving as a service in Austin in June
It also reiterated plans for affordable models to be launched this year, potentially catalyzing annual growth in deliveries, something it said it expects to resume in 2025.
Tesla was flat on deliveries in 2024 compared to 2023.
The positives during the call were enough for Truist Securities analyst William Stein to raise the company’s price target to $373 from $351. However, Stein’s note to investors showed there was something to be desired despite all the good that was revealed during the call:
Stein said there was “not enough ground-truth” during the call and too much of a focus on “cheerleading” the company’s potential releases this year:
“Too much cheerleading; not enough ground-truth. In Q4, TSLA’s ASP weakness drive revenue, GPM, OPM, & EPS below consensus.”
As previously mentioned, Tesla did report weak financials that missed consensus estimates. What saved the call and perhaps the stock from plummeting on these missed metrics was the other details that Musk revealed, especially the FSD launch in Austin in June.
There were also plenty of things related to the affordable models and other vehicles, like the fact that Tesla plans to include things like Steer by Wire, Adaptive Air Suspension, and Rear Wheel Steering, that helped offset negatives.
Stein saw this as a distraction from what should have been reported:
“While CEO Elon Musk played the role of cheerleader, calling for TSLA’s path to massive market cap by leading in autonomy, management was remarkably short on two critical details: (1) info about new vehicles in 2025 and (2) milestones for AI acheivements, especially FSD. We continue to ask ourselves ‘where’s the beef?’ CY26 EPS to $3.99 (from $4.87). DCF-derived PT to $373 (from $351).”
Tesla did detail some AI milestones, like its record-breaking miles per accident on Autopilot, which was a Q4-best of 5.94 million miles. The Shareholder Deck also outlined major upgrades to AI:
“In Q4, we completed the deployment of Cortex, a ~50k H100 training cluster at Gigafactory Texas. Cortex helped enable V13 of FSD (Supervised)1, which boasts major improvements in safety and comfort thanks to 4.2x increase in data, higher resolution video inputs, 2x reduction in photon-to-control latency and redesigned controller, among other enhancements.”
Tesla shares are up 2.11 percent on Thursday as of 12:05 p.m. on the East Coast.
Need accessories for your Tesla? Check out the Teslarati Marketplace:
- https://shop.teslarati.com/collections/tesla-cybertruck-accessories
- https://shop.teslarati.com/collections/tesla-model-y-accessories
- https://shop.teslarati.com/collections/tesla-model-3-accessories
Please email me with questions and comments at joey@teslarati.com. I’d love to chat! You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.
Tesla has released its Q4 2024 vehicle safety report. Similar to data from previous quarters, vehicles that were operating with Autopilot technology proved notably safer.
The Q4 2024 report:
- As per Tesla, it recorded one crash for every 5.94 million miles driven in which drivers were using Autopilot technology.
- The company also recorded one crash for every 1.08 million miles driven for drivers who were not using Autopilot technology.
- For comparison, the most recent data available from the NHTSA and FHWA (from 2023) showed that there was one automobile crash every 702,000 miles in the United States.
Previous safety reports:
- In Q3 2024, Tesla recorded one crash for every 7.08 million miles driven in which drivers were using Autopilot technology and one crash for every 1.29 million miles driven by drivers not using Autopilot technology.
- In Q2 2024, Tesla recorded one crash for every 6.88 million miles driven in which drivers were using Autopilot technology, and one crash for every 1.45 million miles driven for drivers not using Autopilot technology.
- In Q1 2024, Tesla recorded one crash for every 7.63 million miles driven in which drivers were using Autopilot technology, and one crash for every 955,000 million miles driven for drivers not using Autopilot technology.
Year-over-Year Comparison:
- In Q4 2023, Tesla recorded one crash for every 5.39 million miles driven in which drivers were using Autopilot technology and one crash for every 1.00 million miles driven for drivers not using Autopilot technology.
Key background:
- Tesla began voluntarily releasing quarterly safety reports in October 2018 to provide critical safety information about our vehicles to the public.
- On July 2019, Tesla started voluntarily releasing annual updated data about vehicle fires as well.
- It should be noted that accident rates among all vehicles on the road can vary from quarter to quarter and can be affected by seasonality, such as reduced daylight and inclement weather conditions.
Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.
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