Analyst Dan Levy doubled his firm’s price target from $400 to $800 on the basis of “solid margins” and the automaker’s ability to easily raise capital.
“With Tesla raising $12bn in ‘20 and not seeing a dent in the stock, it implies Tesla’s cost of capital is negative – the market is paying Tesla to take capital. This is a significant advantage vs. other automakers, and Tesla has the funds to expand capacity as much as it desires,” said Levy in a note to investors.
Another factor in play for the updated price target is Tesla’s manufacturing expansion. Levy noted he expects the automaker to have an installed production capacity of 1.44 million vehicles by the end of 2021.
“The added capacity underscores our forecast for 2021 deliveries of 853k vs consensus of 791k. While the Berlin launch will take longest, we believe this is the highest priority—enabling Tesla to cut price and thus better capitalize on the Europe EV opportunity, which is ground zero for global EV inflection…similar to what it did in China in 2020, with a 30% cut in Model 3 price,” Levy wrote.
Despite the new price target, Levy maintained his ‘neutral’ rating on the stock.
Tesla (TSLA) shares climbed more than 740% in 2020. The stock began 2021 with an 11-day winning streak which ended on Monday, closing down nearly 8% to close at $811.19.
Source: Yahoo Finance