After stocks soared higher in 2020 due to surging car deliveries, Tesla enters 2021 with a lot of momentum, even as its vision of bringing electric cars into the mainstream is still a long way off.
The Elon Musk-led auto industry disruptor wowed Wall Street once again over the weekend, reporting annual car deliveries of 499,550, just shy of its 2020 goal of half a million, but well above estimates. of analysts.
The disclosure capped a year in which Tesla reported a string of profitable quarters and joined the S&P 500, establishing the company as one of the world’s most valuable companies and elevating Musk to the second-richest person behind the CEO of Amazon. , Jeff Bezos.
The shares rose again on Monday, ending 3.4 percent gain at $ 729.77, after the shares rose more than 700 percent in 2020.
The company’s market capitalization of nearly $ 700 billion means it is worth more than General Motors, Ford, Toyota, Honda, Fiat Chrysler and Volkswagen combined.
Tesla watchers don’t think Musk can match that kind of valuation increase in 2021, but they expect continued progress as the automaker adds production capacity and pushes the boundaries of new technologies, including autonomous cars.
“In 2020, Tesla had a really unprecedented streak of positive developments, a positive news flow in history,” said CFRA Research analyst Garrett Nelson, who is bullish on Tesla but has a grip on stocks and a target. 12 months of $ 750 per year. share.
“We are now reaching a point where it is difficult to identify what the next positive might be.”
– Still unaffordable for many –
The increase reflects optimism as construction of new Tesla factories in Texas and Germany continues, joining existing plants in California and Shanghai that are increasing production.
In a note on Monday, Wedbush analyst Daniel Ives cited China’s “hot” demand for electric vehicles as an additional source of confidence.
The transition to 2021 will prove to be “a major inflection in global electric vehicle (EV) demand,” with the technology reaching 10 percent of global automobiles by 2025 compared to three percent today, Ives said.
“We believe that China’s growth story is worth at least $ 100 a share in a bullish case for Tesla, as this EV penetration will increase significantly over the next 12 to 18 months.”
There is also reason to expect greater acceptance of electric cars in the United States, as President-elect Joe Biden has pledged to build 500,000 electric vehicle charging stations as part of his campaign to tackle climate change.
Musk has expressed his determination to cut the price of Tesla electric cars, which currently start at $ 37,990 in the US market.
The Tesla boss is developing battery design, material and production innovations that combine to reduce cost per kilowatt hour by 56 percent.
That should allow Tesla to introduce a $ 25,000 model in “three years,” Musk said in September, adding that “it is absolutely critical that we make cars that people can actually afford.”
– Overrated? –
Musk has “a history of achieving pretty lofty goals,” iSeeCars executive analyst Karl Brauer said, adding that Musk has hit targets “that may seem unrealistic.”
Stock prices tend to reflect the stakes on the future, and Tesla’s privileged position in electric cars and other technologies has been the source of their rise.
Still, some analysts believe stocks have soared to unrealistic levels.
“Tesla’s performance in 2020 was impressive, but not as impressive as the rise in its shares, which we continue to believe are overvalued,” said a note from JPMorgan Chase, which is “underweight” in stocks.
“We believe that global mass adoption of pure electric vehicles is still years away, but Tesla is the leader in the space,” Morningstar said in a note last month.
“Tesla will have growth problems, recessions to fight before reaching mass market volume, more competition and needs to pay off debt. It’s important to keep the hype about Tesla in perspective relative to the company’s limited, but now growing, production capacity. “