Few companies in the world ignite passions with staunch followers and detractors of their excesses, as is the case of the American electric car manufacturer Tesla. Also helping is a singular CEO like Elon Musk, a kind of new economy visionary who, among other quirks, invests some of the company’s liquidity in cryptocurrencies and hopes to launch a mission to Mars in 2024.
Changing the order of the factors, perhaps in the case of Tesla it is interesting to start at the end of any analysis: the recommendations. Last Monday he presented results and while the Morgan Stanley analyst gives him a target price per share of $ 900, his JP Morgan colleague places it at $ 155.
The Bloomberg consensus places the one-year price at $ 627.10, compared to the $ 700 at which its price is currently moving. A very exaggerated division of opinions, even for a technological value that in the last 12 months has risen 341.4% in the stock market and reached a maximum of $ 900, although in 2021 it loses 12% of its value. It also has a capitalization of no less than 687,000 million dollars that distances it from the traditional automobile companies.
Tesla earned in the first quarter of the year 438 million dollars, chaining seven quarters of profits. But the data hides 101 million earned from the sale of 10% of its bitcoin portfolio, which amounts to 1,500 million, as well as the 518 million dollars that has been targeted for the placement of CO2 rights to other car manufacturers. Lower taxes than expected also helped the bottom line.
After that hiatus of extraordinary profits, analysts look at the electric car business, about which they are optimistic. Tesla set a record of deliveries with 185,000 vehicles in the quarter (109% more) and a production of 183,338 units, all of them Model 3 and Model Y, models with less margin. The company is waiting to start shipping the new Model S and Model X, its most expensive vehicles, this May.
A report this week from Credit Suisse bank is neutral on Tesla shares, which it gives a price target of $ 800. The analyst highlights earnings per share (EPS) of 93 cents, compared to 80 cents in the market consensus, and a good evolution of its gross margin. Consider that Tesla’s speech is unchanged in this quarter (promises a 50% annual sales growth). “Tesla keeps its outlook for 2021 and the launch of capacity at its new Austin and Berlin plants underway, which means the narrative is intact.” And he adds: “Combining the new factories with the expansion in Shanghai, we estimate that Tesla will exit 2021 with an installed capacity of 1.44 million units compared to 1.05 million today.”
Goldman Sachs also bets on Tesla after the results and raises its 12-month price target to $ 860 from the previous 835. “We believe Tesla is well positioned to improve car margins over time driven by scale (new factories in Shanghai, Berlin and Austin), better battery cost structure and product cycles, with similar costs between the cheapest and most expensive ranges ”. Of course, it stands out as risks to the fall in value: “The rate of adoption of electric vehicles and the ability of Tesla to meet this demand given the limitations of the supply chain,” they conclude.
More critical are Citi experts, who in a note explain that Tesla’s “non-outlier results for the first quarter were below consensus and are probably considered disappointing, but we do not believe that the quarter will change much the bullish or bearish debate of his actions”.
Finally, Adam Vettese, an analyst at the eToro platform, highlights the increase in gross and operating margins above consensus, in addition to exceeding revenue expectations with $ 10.39 billion. It considers that it has little capacity to rise at these levels, but that President Biden’s green agenda may be a spur for further increases in the medium term.
The eye that leads
Tesla’s expenses increased this quarter, mainly due to increased investment in R&D for its new models and the development of the 4860 battery, which is cheaper and more efficient than current ones. But one of the great fronts that analysts highlight is the autonomous car and in this section the company chaired by Elon Musk has made an original bet on which the progress of its action also depends.
Goldman believes its vision-only autonomous car strategy, without relying on radars like other manufacturers do, will be a topic of debate among investors about the automaker’s future. Tesla stated that it hopes that its urban V9 version will soon be on the streets of the United States and explained how the system continuously learns, so it advocates it will be the optimal option.
However, from Credit Suisse they see more drawbacks: there is concern about the launch of functions that are not fully validated and that collide with regulations such as the European one, where Tesla is not yet authorized to launch those functions.