Tesla’s stock has dropped some in the weeks since the automaker’s Q1 2023 earnings call, with some citing concerns around slowed inventory turnover and price cuts. However, one bullish analyst from Piper Sandler is still banking on the company’s long-term profits, and he expects Tesla’s shares to surge significantly over the next year.
Above: A Tesla Model Y (Image: Casey Murphy / EVANNEX).
Piper Sandler analyst Alex Potter expects Tesla’s shares to jump to $280 in the next 12 months, which would represent over 60 percent in gains, The Motley Fool reports. Despite recent bearishness, Tesla shares are up almost 40 percent since the beginning of the year, while the S&P 500 index has only jumped 8 percent during the same time.
The news comes as some analysts have dropped price targets on Tesla’s shares in recent weeks, even including Potter. Many have cited concerns about the company’s dipping profit margins following price cuts across its lineup. Prior to the earnings call, Potter previously held a $300 12-month price target on Tesla’s stock, noting lowered estimates for 2023-2025 in his newest update.
In response to margin concerns during the earnings call, Tesla CEO Elon Musk emphasized the company’s long-term objectives for autonomy, which he and bulls argue would drive significant profits no matter what margins the vehicles are selling for. Potter holds this view too, as part of his reasoning behind the still-bullish target.
Although Potter doesn’t expect Tesla’s Full Self-Driving beta to reach total autonomy this year or anytime soon, he still echoes that Musk is right about potential future profits through a network of robotaxis. He also highlights Tesla’s impressive free cash flow and potential for margin expansion, as well as the automaker’s rare ability to finance its own business compared to much of the industry.
The $280 price target on Tesla shares represents the fourth-highest of any analyst tracked by Bloomberg. Tesla also reported a 15-day supply of inventory vehicles for the first quarter, which the publication notes is considered fairly healthy in the auto industry. Still, the current inventory levels paired with uncertain macroeconomic headwinds are keeping some bearish on Tesla, as they worry that high supply could risk the company’s more than $500 billion market cap.
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Tesla remains an important growth stock for many investors, and while there’s no way to tell where the company’s shares are headed, bullish shareholders are looking toward the long term. While price cuts and macroeconomics have made the company's profits rocky in the near term, many expect substantially increased revenue down the road with the improvement of FSD and its subsequent use for robotaxis.
Sources: The Motley Fool / Bloomberg
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Source: EVANNEX