Is Tesla on track to achieve gross margins comparable to Apple’s against a backdrop of rising demand in China? Bulls Munster, Ives Respond to Third Quarter Results


Tesla Inc’s impressive third-quarter earnings and revenue despite chip shortage impact point to robust electric vehicle trajectory for company led by Elon Musk in current quarter and beyond, Loup analysts say Ventures and Wedbush Securities.

Gene Munster of Loup Ventures believes Tesla’s sales could jump from $ 70 billion next year to $ 400 billion in 2027 and the stock could reach $ 2,500 per share by then.

Tesla analysts: Wedbush analyst Daniel Ives maintained an outperformance rating and a price target of $ 1,000 for Tesla stock.

Tesla’s Thesis: Ives, who is a longtime Tesla Bull, said the firm’s strong earnings pace speaks of a more profitable business going forward and is the key to a higher revaluation of the action.
Tesla announced third-quarter EPS of $ 1.86, beating the street consensus of $ 1.57.

Ives estimates that China would account for more than 40% of Tesla’s global shipments in 2022 amid faster adoption of electric vehicles. In China, Tesla competes with local competitors such as Nio Inc and Xpeng Inc.

Ives said the battered gross margin in the quarter shows greater efficiency than the electric vehicle maker sees with Giga Shanghai in China. Tesla posted record gross margins of 28.8% in the quarter, beating estimates by 25.1%.
“We believe Chinese demand rebounded during the quarter,” Ives said.

Munster said Tesla’s impressive earnings indicate the company could offer Apple Inc a 40% gross margin.

Analyst Loup based this claim on “increased manufacturing efficiency with giga factories in Austin and Berlin, growth in high margin software subscription growth driven by price increases FSD and adoption of FSD, and an expected decline in battery costs over time.

Tesla weathered the chip crisis well in the third quarter, but warned that “parts shortages” have factories operating below capacity. Regarding the price hikes, Tesla CFO Zach Kirkhorn told investors on a post-profit call that there was “a wake-up call” for electric vehicles and “it caught us a bit off guard. “. Price Action: Tesla shares closed 0.18% higher at $ 865.80 per share on Wednesday. Shares fell 1.36% in the extended hours.

Tesla, Inc. is an American electric vehicle and clean energy company headquartered in Palo Alto, California, United States, which plans to move its headquarters to Austin, Texas in the future. Tesla designs and manufactures electric cars, grid-scale home energy storage batteries, solar panels and solar tiles, and related products and services. In 2020, Tesla recorded the highest number of sales of battery-electric vehicles and rechargeable electric vehicles, capturing 16% of the plug-in market (which includes plug-in hybrids) and 23% of the electric battery market (pure electric ). Through its subsidiary Tesla Energy, the company develops and is a major installer of photovoltaic systems in the United States. Tesla Energy is also one of the world’s largest suppliers of battery energy storage systems, with 3 gigawatt hours (GWh) installed in 2020.

Summary of the news:

  • Is Tesla on track to achieve gross margins comparable to Apple’s against a backdrop of rising demand in China? Bulls Munster, Ives Respond to Third Quarter Results
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