An analyst at Piper Sandler, Alexander Potter, has raised his price target of Buy-rated Tesla stock by over 130% to $1,200, Barron’s reports. That target was raised from a mere $515 that was set in September when Tesla’s shares were trading around $440.
Potter’s 104-page report included a detailed look at all of Tesla’s businesses, which included stationary power, auto leasing, software sales, and more. Potter crunched the numbers and projected that Tesla’s businesses will be generating almost $37 billion in free cash flow by 2025. If you remember, Tesla generated around $2.8 billion in free cash flow last year.
For Tesla’s automotive business, Potter foresees Tesla delivering 894,000 vehicles in 2021 and almost 5 million by 2024. By 2030, that number could reach 9 million, and the rise in deliveries is a major part of Tesla’s growth in its free cash flow.
With around 950 million shares outstanding, at $1,200 a share, Potter valued Tesla overall around $1.1 trillion. Barron’s pointed out that this is the first conventional analyst target that has valued Tesla’s market cap over $1 trillion.
Barron’s also noted that that figure Potter came up with could be a bit higher — $1.4 trillion — if you consider that Tesla has around 1.2 billion shares outstanding on a diluted basis. The difference between the number of basic and the number of diluted shares outstanding is due to stock options. The article noted that Tesla’s CEO, Elon Musk, takes most of his compensation in stock and those options will probably be converted to stock one day.
ARK Invest Has A Crystal Ball & Can See The Future
This may sound random, but ARK Invest has foreseen this. Perhaps it actually does have a crystal ball and can predict the future with it. Back in February of last year, I wrote an article titled “Why Tesla Could Be Worth Trillions of Dollars in 4 Years.” That article was inspired by ARK Invest. Now, remember, this article was written before the pandemic shut everything down here, and before Tesla’s historic progress on the stock market, that stock split back in August, and Tesla joining the S&P 500.
So, yes, ARK Invest seems pretty skilled at predicting things. That aside, ARK noted that it expected Tesla’s share to jump another ten-fold to around $7,000 by 2024, but could go even further than that if Tesla is to nail autonomous driving.
“A fully autonomous taxi network could break the mold of a traditional automotive manufacturer’s business model completely,” ARK Invest mentioned in its blog post. “Tesla could shift from a model of one-time transactions at hardware-like margins to a model of recurring transactions at software-like margins, charging passengers per mile and taking a platform fee.”
Another stock seer, Ron Baron, whose fund owned more than 1.6 million Tesla shares at the time, noted that “all of us will likely be Tesla customers in 25 years.” He also believed that Elon Musk’s goal of Tesla producing 500,000 cars per year in 2020 would happen — and it did. Baron also projected a 50–50 chance that Tesla could pull in $1 trillion in revenue in 2030.
You can read more of that article here. It’s great to look at how far Tesla has come. Clean tech is winning!