Tesla Price Targets Raised Following Recent Gains
Tesla shares saw a 13-day win streak through Wednesday, and many analysts have responded positively to the news. Now, some are considering where the stock may go next, and what factors influenced the gains — including the announcement of two upcoming charging partnerships with Tesla.
Above: Tesla vehicles at a Supercharger (Image: Casey Murphy / EVANNEX).
The 13 consecutive days marked Tesla’s longest win streak yet, and some are pointing to charging deals with Ford and General Motors as major factors in the surge (via Barron’s). The stock has dropped in days since, and some wonder how long the losing streak could continue. Still, the gains didn’t stop a number of analysts from raising their price targets on Tesla.
Ford and GM both announced that their EVs will be able to use Tesla’s Supercharger stations next year. Additionally, they have both committed to using Tesla’s North American Charging Standard (NACS) in their next generations of EVs. With Tesla shares up about 45 percent in the last month, Wedbush Securities analyst Dan Ives pointed to the charging deal as an important opportunity for revenue.
“What has changed for the Street over the last month is the recognition with the Ford and GM Supercharger partnerships that Tesla’s sum-of-the-parts valuation is now finally starting to get tapped into,” Ives wrote in a note to clients on Wednesday.
As Barron’s explains, a sum-of-the-parts (SOTP) valuation looks at the various businesses within a company separately, to see how individual business valuations compare to the company’s overall valuation.
“This reminds us of when the Street started to realize the margin story and valuation at [Amazon Web Services] for Amazon and the growth/margins of the Apple Services story in Cupertino,” he added.
Ives reiterated a Buy rating on Tesla stock, increasing his price target from $215 to $300. Daiwa Capital analyst Jairam Nathan also emphasized the added revenue stream with the charging deals, saying that Tesla’s “technology lead [is] manifesting into revenue opportunities.” Nathan raised his price target to $285 from $185 on Wednesday, and he rates the stock a Buy.
Some analysts are also considering long-term factors, such as the potential for future revenue through autonomy (once Tesla’s Full Self-Driving reaches that point). CEO Elon Musk has continually boasted the possibility for robotaxis, a self-driving service that he says could bring about software-like margins. This idea was picked up by RBC Capital Analyst Tom Narayan, who thinks the charging partnerships were only a part of the gains.
“We are strong believers in robotaxis,” Narayan wrote. “Tesla’s leading FSD [Full Self-Driving] software should offset margin dilution from lower-priced models and also position the company well as it transitions into a software business.”
Narayan says that robotaxi revenue could someday represent as much as 70 percent of Tesla’s value, emphasizing the potential for whole fleets to be run autonomously. On Thursday, Narayan increased his price target on Tesla from $212 to $305, and he rates the stock a Buy rating.
At the time of writing during after-hours trading on Thursday, Tesla shares were changing hands at $253.50 (-$2.40), down 0.94 percent from the day’s closing price.