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Tesla (TSLA) gets new $800 price target based on its ability to execute

Several Tesla analysts on Wall Street are revising their models and price targets on Tesla (TSLA) following the massive stock rally. One of the analysts, who accurately predicted the recent price increase, set a new high price target of $800 on Tesla (TSLA).

Pierre Ferragu from New Street initiated coverage of Tesla over a year ago with a price target of $530 per share.

Not many of his colleagues thought that was possible at the time, but the stock surpassed that price last week.

Now several of his peers on Wall Street are revising their own price targets on Tesla, and Ferragu is now doing the same.

Ferragu reflected on how his expectations of Tesla played out over the last year and a half:

We conclude that over the past 1.5 years several key dimensions of our thesis (technological dominance, strong sustained demand, Tesla’s ability to execute) played out in line with our expectations. We did not anticipate the decline in Model S&X deliveries last year, as Model 3 ramped, but this has limited implications for our long-term perspective.

Ferragu currently estimates that Tesla is on a path to sell 2 to 3 million cars per year after 2025 for a market cap of $230-350 billion:

We hence stick to our views and expect Tesla to sell 2-3 million cars per year after 2025, at industry leading margins, justifying a market capitalization of $230-350 billion, or ~$1,100-1,700 per share. Discounted back to early 2021, we would see that fully priced with a stock in the $640-960 range. On that basis, we increase our target price to $800.

Pierre Ferragu is ranked No. 2,555 out of 5,855 analysts on TipRanks with a success rate of 62% and an average return of 1.9%. We recommended buying Tesla ahead of the recent rally.

Electrek’s Take

I think Ferragu’s analysis of 2 to 3 million cars after 2025 is reasonable.

In my opinion, Tesla will hit at least 2 million cars a year sooner than 2025, since everything points to 1 million cars next year (2021) and Tesla has been much faster at doubling production than every four years.

My own prediction would be 3-4 million cars in 2025.

What’s yours? Let us know in the comment section below.

Disclosure: I am long TSLA.

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