Elon Musk, CEO of Tesla (TSLA), revealed his thoughts about a wide range of topics in a long interview yesterday. For more than 2.5 hours, he chatted with Lex Fridman about subjects as varied as Dogecoin, Putin and neural networks. Fridman is an AI (artificial intelligence) researcher at MIT who focuses on autonomous vehicles, human-robot interaction, and machine learning. Musk and Fridmans' common interests intersected well, and Musk spoke freely and comfortably.
During the interview, Musk described the complex computing involved in designing self-driving cars, saying that creating the cars was harder than he had anticipated. Musk also described his predictions of inter-species life on Mars. Over all, Musk seemed contemplative, pausing to think before he responded to Fridman's questions.
This philosophical image of Musk is at odds with his reputation as a wild card, who impulsively makes proclamations out of left field, such as about Dogecoin. Many investors are concerned about his seemingly impetuous decisions, and especially his stock sales. Musk and a few other Tesla officers have sold $5.9 billion worth of Tesla shares in the past three months, with the mass majority sold by Musk. Even yesterday, the same day that he delivered his thoughtful interview, Musk sold more than one billion dollars worth of stock, in two separate transactions.
Its difficult to know the impetus of these sales. It could be that Musk needs the money for a personal purpose or to invest in another business. However, as indicated by TipRanks' Confidence Signal, this seems like a negative indicator for the stock.
It's up to investors to decided whether these Sells are significant, or whether they reflect Musk's impulsivity. Financial analysts don't offer a clear direction for investors to follow, as only around half of the analysts who gave ratings on Tesla in the past 3 months called it a Buy.
After a bumpy 2021 defined by chip shortages and logistics issues, 2022 should provide a more hospitable environment for the upcoming EV revolution.
Wedbush analyst Daniel Ives thinks the stage is set for EVs to take a “significant step forward in driving customer adoption in this green tidal wave with many winners as part of the biggest transformation to the auto industry since the 1950s.”
But with one winning more than most. While 2021 has been marred by the issues noted above, Tesla (TSLA) has navigated the chip supply shortages “better than any automaker” over the past six months, placing it in a “clear position of strength” heading into 2022.
Ives counts three main catalysts for Tesla next year, believing that if they go as planned, they should act as a “major driver of the stock moving higher.”
One is the “key variable” in the Tesla bull thesis – China. In 2021, Tesla made several gaffes (PR/safety) which tainted the China bull story, although the company came through them eventually and Ives estimates the far east superpower will “represent 40% of deliveries” in the coming year. China, says Ives, could be worth $400 per share in 2022.
Secondly, Tesla’s “high-class” problem of demand currently outstripping supply is set to be rectified with the “key” Giga openings in Austin and Berlin. The latter opening is particularly pertinent considering the current bottlenecks affecting European logistics.
The new facilities will double capacity by the end of 2022 from roughly 1 million today to ~2 million units annually.
The Austin plant is expected to launch early next year, and although some bureaucratic issues still linger in Berlin, a January/February launch is still plausible.
Lastly, the third catalyst is from the expected resolution to the global supply chain issues which have been a “drag on overall unit growth.” Ives believes the situation will “significantly moderate” in 2022.
So, let's get down to business, what does it all mean for investors? Ives has an Outperform (i.e., Buy) rating for TSLA stock, backed by a $1,400 price target. This figure suggests room for ~29% growth over the next year. (To watch Ives’ track record, click here)
As per usual, Tesla elicits a wide range of opinions on Wall Street. The stock’s Moderate Buy consensus rating is based on 13 Buys, 8 Holds and 5 Sells. That said, most think the shares are overvalued; going by the $1,004.33 average target, the stock will shave ~7% off its value over the one-year timeframe. (See Tesla stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.