Piper Sandler is predicting a favorable outcome for Tesla’s China operation, which might end up boosting overall stock prices
Even though the most recent news about Tesla stock (NASDAQ:TSLA) have mostly been revolving around slightly lower expectations from Wall Street, it seems some analysts actually put more trust in the company that others. Unlike the more cautious analysis floating around the financial world lately by Wall Street experts, the EV manufacturer actually got a more favorable, 30% higher price target from Piper Sandler. The company puts a lot of trust in the potential of Tesla in China, arguing more favorable outcomes for the company.
This was revealed earlier in a note sent to clients by Piper analyst Alexander Potter, stating how the Model 3 that is made in China could be quite successful. This is due to the idea that, if the Model 3’s market share in the United States can be replicated in China, the all-electric sedan could help Tesla produce some record-shattering delivery volumes.
“Bottom line: If Tesla’s Model 3 market share in the United States can be replicated in China — and if this logic extends also to Model Y — then Tesla’s annual volume in China alone would eventually exceed 650k units,” Potter wrote.
Due to this impressive potential in the world’s largest auto market, the Piper analyst appropriated a target price of $553 per share for Tesla’s shares, a significant jump from the previously revealed target of $423. In turn, this presents a boost of well over 30%, making the firm one of Tesla’s biggest bulls as of the writing of this article. Not bad for a company that some analysts dubbed a losing affair for the last several years, with the EV maker constantly proving them wrong. But hey, the investment community made some bad conclusions in the past, so everyone investing in Tesla stock should be vary of any predictions: good or bad.
While the expectations made by Potter for Tesla’s venture in China might be overly ambitious, the company is doing well in the country right now. They are firing on all cylinders with the country’s government and the local regulators, giving the U.S. based carmaker favorable treatment. Furthermore, Tesla even got into the good graces of the local financial backers, getting low-interest loans from local banks when funding was needed for the construction of the Shanghai-based Gigafactory. In addition to that, the construction of Gigafactory 3’s Phase 1 zone was completed in record time. Just a little less than a year ago from breaking ground, Tesla managed to start deliveries of the first Made-in-China Model 3, slated for its employees in the country. With actual customer deliveries starting to trickle in, the Tesla CEO, Elon Musk, flew into the country and handed over a few Model 3’s to local customers in great spirit.
Add China’s Model Y program to the overall future delivery numbers, and Piper Sandler’s ambitious annual estimates for China may very well end up being plausible after all. At the time of this article, Tesla stock was sitting at $478.15-3.19 (-0.66%) overall.
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