Tesla (NASDAQ:TSLA) stock has been running out of steam lately, as the market may be waking up to the fact that the EV leader’s key catalysts are already baked into its valuation. That, at least, is the view of Needham analyst Chris Pierce.
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“We still see an expensive stock, with TSLA needing to trade at 50x our new ’32 estimates discounted back to drive ~30% upside from current prices, despite TSLA operating from a trailing position in autonomous rideshare and the early stage nature of the Robotics business,” Pierce opined.
That said, Pierce isn’t entirely bearish on Tesla’s future. In fact, he has bullish predictions for the company’s various business segments that could serve as meaningful catalysts moving forward.
For Full Self-Driving (FSD), Pierce expects ~31 million Tesla vehicles on the road by 2032, with a 56% adoption rate for FSD and a 90% gross margin. The analyst anticipates Tesla to charge $59 per month for the service, aligning with the recent trend of price cuts as competition heats up. However, he does acknowledge some skepticism around these figures.
“Our take rate screens aggressive when considering recent NVDA comments calling fully autonomous cars ‘a next decade marvel,’” Pierce said.
Likewise on the Robotaxi, Pierce admits his forecast of $100 billion in bookings for FY32 “screens aggressive”. That is unless the US rideshare market expands with the rise of autonomous vehicles, Tesla becomes the “dominant player,” or autonomy accelerates last-mile delivery adoption. The analyst sees 50% gross margins, with bookings increasingly aligning with revenues as autonomous adoption grows.
The term “screens aggressive” pops up again in Pierce’s outlook for Tesla’s Robotics business. That’s based on forecasting Tesla will sell around 1.3 million robots in FY32 at an ASP (average selling price) of $30,000 with 30% gross margins. By that point, Tesla will have sold a cumulative 3 million robots, reaching around 2% of U.S. households.
Back to the more pedestrian business of selling cars, Pierce stays more cautious. The analyst anticipates the introduction of a new, more affordable vehicle in the near term, followed by “inflationary price increases,” while assuming the eventual phase-out of regulatory credits. “We’re bearish on margins vs consensus, flowing through TSLA’s consistent stance of trading volume for margins,” the analyst added.
For now, Pierce is playing it safe, sticking with a Hold rating on Tesla shares without assigning a specific price target. (To watch Pierce’s track record, click here)
Meanwhile, other analysts are more decisive, with an average price target of $335.86 – about 4% below TSLA’s current levels. Overall, with 12 Buys, 12 Holds, and 10 Sells, Wall Street remains split, landing the stock firmly in Hold territory. (See Tesla stock forecast)
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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.
