Tesla’s price target has increased following changes to the electric vehicle tax credit, according to CFRA. This report highlights how the signing of the inflation reduction act was the equivalent of Christmas in August for Elon Musk and the team, as the law means Tesla become the biggest winner, given that the most versions of the industry’s two best-selling EVs (Tesla’s Model Y and Model 3) will become eligible for the $7,500 federal EV tax credit, effective from 1 January 2023. Previously all Tesla vehicles had faced out of tax credit eligibility after hitting the 200,000 units per manufacturer cap, and the new law alleviates even more concerns about EV competition. CFRA has increased their earnings per share estimates for the next three years, with non-GAAP numbers showing 2022 expectations rising from $11.90 per share to $12.45 cents, by about a 5% increase there. Their 2023 number has risen from 16 and 20 cents to 17 and 25 cents, while their 2024 estimate has risen from 1875 before to 20 and 75 cents. By taking 60 times those earnings, this leads to their new price target of $1245 (which is up from the previous $1125 price target), indicating a boosted valuation for Tesla.
CFRA’s report is based on a 2024 price to earnings multiple of 60 times, highlighting how even with multiple compressions, they still don’t believe Tesla should be at that low of a multiple until 2024. This report gives a good insight into how Wall Street tends to think about Tesla, like how Tesla is confident in demand, the ability to maintain it, and grow production to the level the company’s established, but Wall Street is always more skeptical. Therefore anything that alleviates concerns even if they’re not valid, will assist with confidence and justification for bullish or aggressive forecasts. Perception often equals reality in the stock market, and this CFRA report shows how perception is starting to change a little as the wait times get reduced in China.
Delivery estimated wait times in China have also been reduced, with Tesla updating the estimated delivery time frames in their Chinese design studio by four weeks, across the board. The Model Y standard range now has an estimated delivery time frame of four to eight weeks, while the long range and performance Model Ys takes 16 to 20 weeks. The Model 3 takes between 12 to 16 weeks. Tesla is working hard to get these delivery times down, as customers don’t want to wait that long for their cars.
Tesla has also faced a number of setbacks and triumphs within the energy space: Tesla Energy’s virtual power plant project in South Australia is expanding, while plans for their Hornsdale Power Reserve expansion remain shrouded in mystery. Tesla solar panels see more success in Texas thanks to its new solar rebate program, while in New York, the company’s solar roof business received an upgrade. Battery capacity concerns were raised in New York, however; and Tesla is still struggling to roll out the Megapack project in California, which has been delayed for four months due to technical difficulties.
Tesla’s latest updates continue to impress, with the stock still holding strong at around $909 per share, despite the ever-changing conditions of the electric vehicle industry, Tesla still comes out on top. With the upcoming stock split, the company’s position is only set to improve. Tesla is currently the largest manufacturer of EVs in the world, and these updates mark another step forward in the continued growth and success of the company.
Overall, Tesla’s latest updates have been rather impressive, with the company’s capacity for growth and expansion continuing to be one of its strongest assets. With Wall Street starting to become more optimistic and projects expanding, it is clear that Tesla has a very bright future ahead. Tesla’s stock price will likely remain strong, especially when compared to other automakers in the industry. While it may face some challenges, the company’s innovation and perseverance ensure that it will stay ahead of the game.