Analysts on Wall Street, Tesla’s most optimistic, expect the electric car maker’s share price to accelerate this year to between $640 and $960 by early 2021. The company’s shares rose more than 6 per cent to $542 on Tuesday, up more than 100 per cent over the past three months.
Pierre Ferragu, an analyst at New Street Research, expects the company to sell 2m-3m vehicles a year by 2025, achieving industry-leading margins and justifying its market capitalisation of between $230bn and $350bn. That equates to $1,100 to $1,700 per share.
“The stock will continue to wobble because the spread between long and short is still very large,” Ferraju said. “
Tesla will report quarterly earnings next week. The company’s surprise third-quarter profit and strong results in the fourth, as well as the start-up of its Shanghai super plant, helped drive share sprees.
Mr. Ferraju raised its target price to $800 from $530 previously, and he expects to report strong free cash flow when it reports fourth-quarter results on January 29.
He also predicted that delivery in 2020 was expected to exceed expectations, with gross margins likely to fall in the first half of the year as the Model 3 cars assembled at the Shanghai super plant grew in overall share.
Earlier on Tuesday, Bernstein analyst Toni Sacconaghi issued a cautious view, saying production at the Shanghai super plant could put pressure on margins in the fourth and first quarters.