According to Dan Ives, an analyst at Wedbush, Tesla’s valuation may increase by $190 billion.
In a letter, he defended a $50 increase in his price estimate for the electric vehicle manufacturer by stating that Elon Musk’s company has proven it can monetize critical items like its supercharger network and self-driving technology.
To reach $350, shares would need to increase by 20% from their present level of $291, which, according to Insider’s calculations, would add $188 billion to Tesla’s market value.
Ives was reacting to Tesla lackluster earnings report for the second quarter, which was released after the market closed on Wednesday and resulted in a 4% drop in the stock price during Thursday’s premarket trade.
Despite beating Wall Street’s earnings and revenue estimates, the EV manufacturer’s profit margins were below expectations because Musk continued with aggressive price cuts to expand market share.
Even after Wednesday’s earnings, Ives remains optimistic about the EV manufacturer.
Analyst calls Musk’s pricing war “a home run success in China, Europe, and the US” as it becomes clear that conventional automakers can’t keep up with Tesla’s reductions.
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Ives: Tesla’s Supercharger Network Deal with Ford and GM a ‘Game-Changer’
Ives pointed out that Tesla’s innovative agreement to share its supercharger network with Ford and GM is a money-making potential, and he went on to say that the company is likely to continue producing record profits after it is able to roll out its entire self-driving technology.
He thinks the company is most analogous to Apple in the late 2000s when the iPhone maker’s share price lagged behind its future profits potential.
“We view Tesla where Apple was in the 2008/2009 period as Cupertino was just starting to monetize its services and golden ecosystem,” Ives wrote in a research note published on Thursday. As Tesla plays chess while its competitors play checkers, “we view this quarter as a major step in the right direction.”
The surge in tech stocks caused by AI has helped Tesla immensely. With a 136% increase in share price this year, the company’s market cap has increased by $530 billion to well over $900 billion.