Business Insider India has updated its Privacy and Cookie policy. We use cookies to ensure that we give you the better experience on our website. If you continue without changing your settings, we\'ll assume that you are happy to receive all cookies on the Business Insider India website. However, you can change your cookie setting at any time by clicking on our Cookie Policy at any time. You can also see our Privacy Policy.
Tesla reached a $100 billion market capitalization in early trading on Wednesday, sparked by a Tuesday call from Pierre Ferragu of New Street that Tesla shares will hit $800 in the next 12 months. Shares were trading at $570.88 as of 2:33 PM Wednesday.
Ferragu's call is the most bullish of anyone on Wall Street's, but many Tesla equity analysts have notched up their price targets for Tesla since October, when the firm surprised The Street with a profitable earnings report. Since then, solid vehicle delivery numbers and positive outlook for Tesla's Gigafactory in China fueled analyst optimism around the stock.
But not all analysts agree that Tesla, currently the most highly valued US automaker of all time with a market cap larger than Ford and GM combined, can keep its bull-run going. And some actually see Tesla's stock unravelling to a fraction of its current share price within the year.
One test of these predictions will come in a week, when the electric-vehicle maker is set to announce fourth-quarter earnings. Ahead of that announcement, here are three different paths forward analysts see for Tesla, and why:
Alliance Bernstein: "Risk/reward is skewed to the downside"
Price Target: $325
Rating: Market-perform
"We acknowledge it is difficult to call the top on a rocket ship," Toni Sacconaghi, a Bernstein analyst, wrote in a note Tuesday, "but we note expectations for TSLA appear to be rising materially, while we remain cautious."
Sacconaghi noted that Tesla shares have jumped 100% in the last six months. While price jumps of that size are not unheard-of amid large-cap stocks, they are rare — especially among autos, Sacconaghi said. A company's ability to keep up "dramatic outperformance" relates to whether companies can keep revenue performance on track, he said.
Tesla faces headwinds on that front, Sacconaghi said. The cost of getting Tesla's Shanghai Gigafactory up and running, seasonally weak demand, and the possibility of Tesla's newest Model Y eating into its Model 3 business, could all be negatives the company faces moving forward, according to the note.
Wedbush: "The bull party likely continues"
Price Target: $550
Rating: Neutral
"The aggressive trajectory of Giga 3 production and demand out of Shanghai look very strong out of the gates," Daniel Ives wrote in a Tuesday note. That's what spurred Wedbush to raise its 12-month price target to $550 from $370, he said.
China is the "major swing factor on the stock," Ives said, adding "we believe the China opportunity is worth at least $100 per share." That, paired with European Model 3 demand, is the driver powering the stock upward, he said.
US demand remains an unknown that investors will be eager to get clarity on in Tesla's Jan. 29 earnings call, Ives noted.
"2020 represents a pivotal year for Musk & Co. with next week's earnings likely a major step forward," Ives said.
New Street: "The best is yet to come"
Price target: $800
Rating: Buy
High demand for Tesla's Model 3 sedan, the company's technological advantage over its competitors, and a recent track record of executing on its business plans, are core reasons why New Street now expects Tesla shares to hit $800 by 2021, wrote Ferragu, a long-time Tesla bull, in a note Tuesday. Ferragu previously set a $530 price target.
Still, the path to $800 could be rocky, he said: "The stock will remain volatile, as the spread between our bull and bear cases remains wide, and God only knows what the next controversy will be." That makes it difficult to call what Tesla's nearer-term share price will be, Ferragu wrote, but in regards to Tesla's January 29 earnings release, the market has been conservative on some key metrics. "We expect a strong FCF [free cash-flow] beat next week" and guidance for 2020 will be above consensus, he wrote, while adding that the cost of the Shanghai gigafactory might affect near-term profits.
And the long-term picture is rosy, he said: "We expect Tesla to produce and sell 2-3 million cars beyond 2025, translating to about $1,100-1,700 per share."
