A bullish call from one Wall Street analyst has propelled Tesla and put it within striking distance of a $1,000 stock price, extending a blistering run for the electric carmaker.
Tesla was on course to set a fresh record high on Wednesday after Piper Sandler analyst Alexander Potter sharply raised his price target for the shares by nearly $200 on the company’s growth prospects in the solar-power business. Mr Potter now has one of the highest estimates among analysts at $928, up from a prior target of $729.
Shares jumped as much as 10 per cent. Tesla was up more than 7 per cent to $922 in late afternoon trading.
Tesla has been on a tear. Its shares have more than doubled in value this year, following a 26 per cent gain in 2019, with investors encouraged by back-to-back quarterly net profits, the start of Chinese production of the Model 3 and the launch of the Model Y sport-utility vehicle. The rapid surge has also squeezed out short-sellers who bet against the stock, adding fuel to its rise.
Even news that Tesla would seek to raise $2bn through a common stock offering hasn’t deterred investors. Shares have gained 20 per cent since the announcement on Thursday.
Investors now value Tesla at about $169bn, more than triple General Motors’ market capitalisation and second only to Toyota among global automakers.
Mr Potter based his updated view on the expectation that Tesla will replicate its automotive success in energy storage. He called Piper Sandler’s own test using a solar-power system to charge a Model X “illuminating”.
He also said many customers have been compelled by the “superiority of Tesla’s products” rather than the “righteousness of its mission”.
“By combining eco-friendliness with blistering 0-60 times and 21st century tech, Tesla has hot-wired human psychology and turned consumers into unwitting climate warriors,” Mr Potter wrote to clients. “But as curmudgeons rightly note, charging EVs with coal-based electricity isn’t very ‘green’. So Tesla’s next challenge will entail making it cool to generate and store one’s own solar power.”
Tesla’s energy segment accounted for just 6 per cent of sales in 2019. Piper Sandler estimated that the market for Tesla’s solar roof could be worth $165bn annually, with 5m new rooftops installed each year. Adding two Powerwall home batteries to each project would boost the market size by $70bn a year.
At $928, Mr Potter has the second-highest price target among analysts tracked by Refinitiv. Forecasts range from $61.57 to $1,147, with an average of $492 — up from $265 three months ago, but 47 per cent lower than the stock’s current level.