Tesla’s stock (TSLA) surged after Model 3 unveil and analyst notes with new $500 PT

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Investors and Wall Street analysts are mostly happy with Tesla’s Model 3 event last night and the confirmation that over 150,000 reservations were placed in the last 24 hours – much more than some of the most optimistic predictions. The company’s stock (TSLA) surged about 10% in early trading before settling down to a 3% gain at ~$236 right after the opening bell.

Analyst Andrea James from Dougherty & Co was among the first to issue a new note with a price target increase to a street high of $500 per share (from $355).

James wrote in her note to clients this morning (via StreetInsider):

“At the end of his presentation, CEO Elon Musk did not drop the mic and walk away. But he could have because Tesla has changed the game again. In one day, Tesla generated at least 150,000+ reservations, representing an order book of $6bn in revenue, and generating $150mm in zero-cost capital from the $1,000 customer deposits. (Note that the 2010 IPO added $190mm to the balance sheet.) ”

“Over six years, we have extensively researched the entire Tesla ecosystem. We’ve spoken with vehicle electrification experts and representatives from Daimler, Nissan, Toyota, Honda and BMW. We’ve met with Tesla’s management, robotics suppliers, customers, sales reps, cell competitors to Panasonic, third-party suppliers with access to the factory floor, and even local bartenders who serve drinks to the workers at shift change. Our research supports this conclusion: Tesla is solving a different set of equations than the rest of the auto industry. The disruption story builds.”

Other catalysts are coming soon including 2016 Q1 delivery results in the next few days and the following earnings next month.

Tesla Model 3: everything we know after the unveil, safety, range, charging [Gallery + Video]

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Comments

  1. Matth - 7 years ago

    I would expect a lot of cancellation when it is clear who will not be getting the $7500 (or even $3750) tax incentive. I think the only reason for the long lines was this incentive. When reality sinks in I think Tesla probably will loose at least half of the reservations in the USA, which will probably include mine since I need to the subsidy to buy the car. Although it is not clear how many of these reservation were placed in the USA. A good indication will be going forward from today. At this moment anyone reserving the car will likely not get the $7500 incentive anymore (or any incentive at all), so I expect the reservations to slow significantly. Lets see how things progress (or not).

    • viii - 7 years ago

      @35K with no incentive, it is still significantly better than anything any other car maker has to offer. The dreaded trip to the car dealership and getting hustled by sleezy salesmen is over. The car buying experience is currently terrible, nobody wants to deal with getting sold, this is a much better more efficient approach. The time of gas-guzzling cars is coming to an end, and people are coming to this realization faster than many expected. People are more conscious of the effects of global warming and yearn to make an impact in any way they can. Tesla has innovated on multiple levels to create this car and they will be rewarded for it incentive or not.

      • NoNo - 7 years ago

        How do you 100% sure know, what exact cars you can buy from other brands in 2-3 years?

      • Matt - 7 years ago

        I do agree that $35k seems to be a fair price for the car. However people like a bargain and a $7500 ‘reductiion’ would just do that. i wonder how many people want to fork out $35k for a car they didn’t test drive yet or no crash test data is available yet. Looks like a big gamble to me. For $7500 less I might take the risk for full price, I am not so sure.

    • Andrew O - 7 years ago

      > I would expect a lot of cancellation when it is clear who will not be getting the $7500 (or even $3750) tax incentive.

      That’s completely irrelevant. If it’s that important to you, you pre-order and find you’re not eligible you’ll do what a (small) number of others did with the Model S and X… sell your place in line. There are plenty of people who will want one at any price and will buy your $1000 reservation off you, likely for more than you paid. As far as Tesla is concerned, though, it’s still a sale and money in their pocket.. They’ve pre-sold out an entire year (or more) worth of production capacity. What do they care if some of the names on that list change over time.

      • Kakkerlak - 7 years ago

        Tesla made it clear last week that Model 3 reservations are not transferable. While the current Reservation Agreement has been amended somewhat (they moved much of the legalese to their /Legal page), it still says “Your Reservation is not transferable or assignable to another party without the prior written approval of Tesla.”

        Why would they care ? After all, Tesla’s fine with giving priority to people whose money benefits the company; Model S/X owners, highly-optioned Model 3 orders, West Coast orders (cheaper trucking, sellable CARB credits), etc.

        So will Tesla allow you to sell your Reservation at a profit by giving you prior written approval ? Maybe. Maybe you’ll have to pay an “Assignment Fee”.

        My guess, though, is that the Company seems to reflect its executives’ values of fair play. Everybody pays the same; even Elon Musk pays full price for his cars. I think that they find profiteering distasteful.

        It will be very interesting to see how many Reservations get cancelled during the IRS credit taper period.

    • MorinMoss - 7 years ago

      I suspect that many will cancel, especially if Tesla is late delivering the cars but even at a 25% conversion rate, that’s $1.5B in revenue.
      But I don’t put a great deal of stock in the $7500 tax credit being the biggest incentive to American buyers because it’s not a cheque that the IRS will cut in your name.
      If you have a TAX LIABILITY of $7500 or more, then what you owe can be reduced by that much.
      If you owe 50 bucks, then that’s all you get to claim; you can NOT get a refund for the unused credit NOR carry it forward.
      If you choose to lease, then the credit is typically claimed by the leasing company.
      http://insideevs.com/top-15-faqs-income-tax-credit-plug-vehicles/

    • Raymond Wong - 7 years ago

      @Matth, I am sure you are wrong. Some might have placed the order but for the incentive just like you. Obviously the majority of pre-buyers of Model 3 is not your type. The reservation number has not slow down a bit that it already exceeded 250k some 10 hours ago as twitted by elon musk.

  2. JJT - 7 years ago

    Someone must have told the VW dieselgate people they must by a Tesla 3 to atone for their sins.

    • MorinMoss - 7 years ago

      Given that VW *could* face $18B in fines in the USA alone, they’d have to do a lot more atonement.

  3. Sam - 7 years ago

    Now we wait 2 years and a lot of things can happen before then in the auto industry. Hope depositors get what they need.

  4. MorinMoss - 7 years ago

    There are a couple about this “unveiling” that doesn’t jibe with previous statements about what to expect.
    The Model 3 wasn’t supposed to “look like any other car” and to have an extremely low coeff of drag, possibly 0.20 or eve lower.
    Neither of those statements are true of any of the prototypes shown.

    • freedomev - 7 years ago

      It doesn’t look like any other car in multiple ways. And I do aero and hydrodynamics and looking closely at it I wouldn’t be surprised if it got a .20CD. It is kind of hard to get lower but my next EV I’m shooting for lower..

      • MorinMoss - 7 years ago

        What about the car’s frontal area? That’s important, too.
        For your next EV, are you going to try covered wheels to keep the drag coeff low?

  5. A-ron - 7 years ago

    And what about the people, such as myself, who haven’t put down a deposit but still plan to buy the car in the future after all the demand dies down? No entry level car will compete with Tesla for many years, the Bolt is case in point. Regardless of whether people will keep their orders, what the reservations say is that people are interested in the movement. People want electric cars, and prices will come down over time with all this demand.

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