Tesla Inc. shares rallied Friday after winning a price-target hike to reflect strong Model 3 demand from China and the recent stock split.

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Model 3 sales in the world's second-largest economy, expected to represent 40% or more of global electric-vehicle sales by early 2022, have higher margins and will help Tesla achieve increased profitability over the next few years, according to Dan Ives, a New York-based analyst at Wedbush Securities.

TickerSecurityLastChangeChange %TSLATESLA INC.423.43-18.33-4.15%

“The pent-up demand in the China electric vehicle market for Model 3's and recent price cuts are catalyzing strong unit deliveries for Musk & Co. in this key market,” he wrote, while raising his third-quarter delivery forecast to 130,000 units, up from 123,000. Ives now expects Tesla to deliver 470,000 vehicles for the full year, with 90% being Model 3s and Model Ys.

The company’s upcoming Sept. 22 Battery Day event has the potential to deliver “game-changing” battery developments, according to Ives, who sees the potential for a 1 million-mile battery that can last for decades.

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As a result of his updated forecast, Ives raised his price target to $475 a share, up from $380, and maintained his $700 bull-case scenario.

Tesla shares have been on a roller-coaster ride since beginning to trade at their 5-for-1 split-adjusted price on August 31.

Shares fell 33% in the five trading days afterward as Tesla announced a $5 billion stock offering and failed to win inclusion in the S&P 500.

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The stock managed to hold support at the 50-day moving average and then rallied 36% over the next five sessions. In the two trading days since, shares have slid 5.85%.

Tesla’s stock is still up 406% so far this year.

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https://www.foxbusiness.com/markets/tesla-stock-model-3-demand-china-wedbush-price-target

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