As has been proven many times before, an Elon Musk tweet is a powerful tool. On the weekend the unpredictable Tesla (TSLA) CEO determined a Twitter poll’s outcome would decide whether he should sell a 10% stake in the company. This was Musk’s way of addressing the debate around unrealized gains being a way to avoid paying taxes. By the way, the answer from Musk’s gazillion followers was ‘yes,’ to which the market said, ‘oh no’ and sent shares down early on Monday.
The latest Musk-centered media storm is likely to swiftly fade until the next one appears, possibly as early as this evening. In the meantime, its best to focus on Tesla’s fundamentals, and here Wedbush’s Daniel Ives believes things are only heading in one direction.
“Two fundamental changes have occurred to the Tesla story,” the 5-star analyst said. “1) the margin story coming out of 3Q earnings speaks to the massive leverage taking hold into 2022/2023, and 2) Hertz/Uber deal was a tipping point highlighting more mainstream adoption of EVs and a rental market that could be another 200k-300k cars delivered annually for Tesla as others follow Hertz’s lead.”
As ever, though, the key element in the Tesla story remains China, which the analyst estimates will be the source of 40% of the EV maker’s 2022 deliveries. It has been far from smooth sailing in this most important of regions, but the company has managed to turnaround significant PR/safety headwinds from earlier in the year, and is now on track to see out 2021 on a ~50,000 monthly run-rate for China in Q4 that could “ramp further into early 2022.”
Tesla also has a “high class problem” of demand outstripping supply. But this will be addressed shortly when the long-awaited gigafactories open in Austin and Berlin and will help “alleviate” the bottlenecks of production felt across the globe.
The growing demand amid expectations EVs are set to make significant inroads over the next several years are why Ives raised his bull case price target to $1,800 (from $1,500) although the base case target remains at $1,100, which is actually 6% below the current trading price. (To watch Ives’ track record, click here)
Ives is one of the most prominent Tesla bulls on Wall Street, and the fact his price target indicates shares are overvalued is telling; Going by the Street’s $863.75 average target, the stock will slide by 26% over the coming months. The analyst consensus rates the stock a Hold, based on 10 Buys, and 6 Holds and Sells, each. (See Tesla stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
