"I typically take a more bearish stance on Tesla, and my view is generally pessimistic around this company and its current valuation relative to where market participants think revenue and earnings will go over time. That said, I thought it would be interesting to take the other side of my own perspective and ask the question: what would need to go right to see Tesla double from here?"
"I don't have anything riding on this taking place, but Elon Musk and others in the company (never mind investors) will undoubtedly benefit in a massive way if Tesla is able to hit the new astronomical targets set for the company by Tesla's board. A $1 trillion compensation package seems insane, but Elon Musk has hit incredible targets in the past. Let's analyze what may need to happen for Tesla to triple from here, and how likely such a situation may be."
Tesla's revenue remains dominated by electric-vehicle sales, and tax-credit sales have recently driven much of the company's profitability. Core fundamentals must improve through higher unit sales, improved margins, and an expanded consumer base to justify a doubling in valuation. Lower interest rates would help by reducing auto loan costs and stimulating demand. Declines in input costs from pandemic highs have partially helped margins, but sustained cost advantages and pricing power will be necessary. Achieving ambitious targets could produce massive gains for company leadership and investors, but such outcomes require substantial execution on production, demand, and profitability fronts.
Read at 24/7 Wall St.
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