Tesla’s gravity defying rally so far in 2020 is set to continue, according to a note from Piper Sandler published on Monday.
The firm more than doubled its previous price target from $939 to a Wall Street-high $2,322, implying 55% upside from Monday’s close.
So should investors ring the register and take profits in Tesla after it surged as much as 328% year-to-date? According to Sandler, “resoundingly, we think the answer is NO.”
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“It’s hard to see how competitors can catch up,” Sandler said, adding that Tesla’s own building capacity is its biggest constraint to further share gains. The firm said that Tesla might still be able to deliver upward of 500,000 cars in 2020, which would be “impressive” given temporary factory closures caused by the COVID-19 pandemic.
And Tesla could deliver nearly 4 million cars in 2025, capturing almost 10% of market share in the US, Piper Sandler said.
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Risks to Piper’s bull thesis include production delays, failure to meet customer expectations, product defects and recalls, supply chain disruptions, and the slow adoption of electric cars.
In response to the note, Elon Musk tweeted on Monday night, “Wow.”
If shares of Tesla continue to remain elevated, Musk could receive a $2.4 billion payout. Shares of Tesla have surged on stronger-than-expected second quarter delivery data and speculation that the company may be eligible for inclusion into the S&P 500 index once it reports earnings later this month.
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