Tesla analyst: Bank of America analyst John Murphy reiterated his neutral rating for Tesla and raised his price target from $ 350 to $ 550.
The Tesla thesis: Murphy said Tesla’s biggest long-term challenge will be funding its massive global expansion efforts, but the higher the share, the less Tesla will have to deal with raising that capital.
This week’s $ 5 billion offer is the second time Tesla has raised outside capital since CEO Elon Musk said it “didn’t make sense to raise money” in January.
Murphy said Tesla’s “upward spiral in stocks” suggested the company “doesn’t need internal funding.”
Murphy said Tesla’s auto business “may or may not be dominant in the long run,” but that result is irrelevant if the company continues to have nearly unlimited access to virtually free outside capital.
“After 17 years of existence, TSLA hyper-growth isn’t necessarily self-funded, and really doesn’t need to be when low-cost capital is plentiful,” Murphy wrote in the note.
Murphy said the more Tesla’s stock price rises, the cheaper capital becomes for the company, which creates a positive feedback loop that pushes the stock price even higher and creates a ” self-fulfilling framework ”that helps explain the extreme 961.5% gain in Tesla stock. over the past year.
Taking Benzinga: Tesla clearly dominates an electric vehicle market that is virtually free from competitors at this point. In order for Tesla to maintain something close to its current long-term valuation, it will need to maintain the same level of dominance once around 20 new EV models produced by other automakers first hit the market before. the end of 2021.
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Final ratings for TSLA
|Sept.2020||Bank of America||Reiterates||Neutral|
|August 2020||Argus Research||Maintains||Buy|
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