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Tesla climbs nearly 10% after Credit Suisse upgrade!
- Credit Suisse upgraded the electric vehicle company to “outperform,” noting improved margins and the promise of FSD.
- Tesla’s stock has dropped about 20% year to date, with particular pressure after CEO Elon Musk told shareholders on an earnings call that the company will stop producing new vehicles in 2022.
- Rivian and Lucid, two other electric vehicle manufacturers, also rebounded on Monday.
Tesla‘s stock rose over 10% on Monday after Credit Suisse upgraded it to “outperform” and the broader market recovered. Tesla had already lost about 20% of its value in January, as part of a sell-off that drove the Nasdaq down with it. Tesla’s stock has been under pressure after CEO Elon Musk indicated on the company’s most recent earnings call that no new model cars, including the Cybertruck, will be delivered to consumers in 2022.
Instead, Musk advised Tesla shareholders that the company intends to focus on growing production at both old and new plants, as well as devoting resources to the development of a humanoid robot and self-driving car technology. Since 2016, Musk has promised to make self-driving cars a reality but has failed to provide a “robotaxi” that is safe for drivers to operate without their hands.
Credit Suisse sees Tesla as a good buy right now, with a price objective of $1,025 on the stock.
“Up until now, Tesla margins have mostly been a function of vehicle hardware sales, with some small software benefits…specifically FSD,” the report continued (Full Self-Drive features). Tesla, on the other hand, should enjoy additional margin advantage when new FSD features are released and more deferred revenue is unlocked (which is anticipated to come through at 100% contribution margin).”
Musk stated on Twitter this weekend, although he didn’t disclose when or if other automakers had shown interest:
Rivian gained over 12% and Lucid gained approximately 7% on Monday, indicating that other electric car makers have recovered as well. Ford and GM, two legacy manufacturers with big ambitions for battery-electric car manufacturing, each saw their stock increase more than 3% by midday Monday.
According to the International Energy Agency, by the end of 2020, there were approximately 6.7 million battery-electric cars (BEVs) on the road throughout the world, including 1.1 million in the United States.
Last August, President Joe Biden stated that by 2030, 50% of all automobiles sold in the United States will be electric, including hybrids and battery electric vehicles.