Electric vehicle (EV) stocks remain as volatile as ever. While most companies have suffered so far this year amidst this broader tech/Nasdaq selloff, a majority of EV companies saw a massive rebound on Monday. The main catalyst appears to be an unexpected analyst upgrade from a top Wall Street bank, which resulted in the rest of the EV sector seeing a significant bump.
In particular, Credit Suisse analyst Dan Levy said that he’s bumping up his target price for Tesla (NASDAQ: TSLA) stock. Shares were already down over 20% since the year began, especially as CEO Elon Musk confirmed the company would not deliver any new model vehicles to customers in 2022, such as its experimental electric pickup truck.
However, Levy said that he thinks this recent selloff is a good opportunity to buy up shares now that they are cheaper. In a note to clients, he raised Tesla’s stock from a neutral to an “outperform” rating while also putting a target price of $1,025 per share. He added that margins have proven to be consistently better than expected, with is a good sign for the company’s long-term prospects.
“Tesla has surprised to the upside on margins, in large part driven by cost reductions; we believe the strong margins are sustainable. We believe legacy OEMs are taking clear steps to transitioning to an EV world, yet we expect Tesla to maintain a lead for the foreseeable future,” said analyst Dan Levy in a statement.
The analyst added that while Tesla’s existing revenue has stemmed largely from its auto hardware sales, new FSD (Full Self-drive) software and features could represent another massive income stream for the carmaker. That’s in addition to the projected exponential growth rate of the electric vehicle industry.
Tesla’s stock was up around 6.5% following the news. The rest of the EV sector also saw massive gains as well by association. Rivian Auto (NASDAQ: RIVN) ended the day up over 15%, while Nio (NASDAQ: NIO) and Lucid (NASDAQ: LCID) were up 9.5% and 8.5% as the day wrapped up. Even Ford and General Motors, two larger rivals to Tesla, were up a few percentage points as well.
According to the International Energy Agency, there were already 6.7 million battery-electric vehicles on the roads as of early 2021. Around 1.1 million of those were in the U.S. alone. However, this figure is expected to see a dramatic upswing in the coming years. President Biden said he wants half of all vehicles sold in the U.S. to be electric by 2030. Other countries have proposed to outright ban gas-car sales by 2030, if not sooner.
Tesla Company Profile
Founded in 2003 and based in Palo Alto, California, Tesla is a vertically integrated sustainable energy company that also aims to transition the world to electric mobility by making electric vehicles. It sells solar panels and solar roofs for energy generation plus batteries for stationary storage for residential and commercial properties including utilities. The Tesla Roadster debuted in 2008, Model S in 2012, Model X in 2015, Model 3 in 2017, and Model Y in 2020. Global deliveries in 2019 were 367,656 units. Tesla went public in 2010 and employs about 50,000 people. – Warrior Trading News
