Shares in Electric car maker Tesla have soared 26 percent in the past few days, to pped in the $1,000, $1,100 and $1,200. Tesla’s market capitalisation now exceeds that of most blue-chip companies in the Standard and Poor’s 500-stock index. However, Dan Ives, an analyst at Wedbush Securities, believes the stock is still likely to surge another 66 per cent over the next 12 months to a record $2,000 a share.
Tesla’s shares have risen 189 percent so far this year, driven in part by widespread growth in the technology industry.
In a note to investors, Ives said strong consumer demand for the Tesla Model 3 in China could help boost Tesla’s share price. He called the strong performance of the Chinese market “the first line of Tesla’s Sugon in a dark global macro environment”.
Mr. Ives noted that China’s demand for Tesla’s new Model Y suv is also on the rise. For these reasons, he thinks strong growth in China could send Tesla’s share price up $300 to $400.
However, there is a small problem. Ives’s official target price for Tesla over the next 12 months is expected to be just $1,250. Apparently, he thinks Tesla’s share price will reach $2,000 in the best of times. That means Tesla must make sure everything goes well.
However, at $2,000 a share, Tesla’s market value will be $370 billion. Only eight U.S. companies now have a market capitalisation above that number: Apple, Microsoft, Amazon, Alphabet, Google’s parent company Alphabet, Facebook, Warren Buffett’s Berkshire Hathaway and Johnson and Johnson.
Mr Ives believes Tesla’s share price will continue to climb, thanks to good sales trends for its higher-priced Model S and Model X models, as well as the lower-priced Model 3 and Model Y models. But many other Wall Street analysts are skeptical of Tesla.
Of the 33 analysts who study Tesla’s stock, only nine gave a “buy” rating, 11 rated “hold” and the remaining 13 advised investors to sell Tesla, according to data compiled by Refinitiv. The average target price for all Tesla analysts is just $710.47 per share.
Those who bear short Tesla’s share price point out that the company has yet to prove that it can continue to make a profit, which is the main reason why the stock has yet to enter the Standard and Poor’s 500 index. J.D. Power also recently noted that Tesla came last in its latest quality ratings for major automakers.
And Musk’s personal factors. While the Tesla chief executive has been hailed by fans as visionary, Musk’s critics worry that he has occasionally made controversial comments on Twitter and recently exaggerated comments about the new crown.
Some investors are also concerned about Tesla’s brain drain. Several key Tesla executives have left over the past year, and Tesla does not have a chief operating officer to help Musk. The lack of a chief operating officer worries many analysts, especially given that Musk has many other business interests that are crowding his time, such as SpaceX and the tunneling company Boring Company. (Small)