Tesla is much more than an EV maker, Wedbush Securities stresses. Therefore, the company must be valued as the sum of its parts. “Tesla continues to play chess while other EV players are playing checkers,” says the analyst.
Shares are recovering in 2023
2023 was a year of recovery for Tesla’s share price, which was great news for its investors. Tesla shares are up 158% year-to-date to nearly $280 a share, at Monday’s closing price. Analyst Dan Ives of Wedbush Securities thinks the EV leader has more room to fight after the latest bullish supply figures.
Tesla reports high Q2 deliveries
Tesla reported that in Q2 it delivered a record 466,140 units, beating the Wall Street consensus by about 20,000 units. The production also rose to 479,700. According to Ives, this is indicative of « improved » capacity and « a healthier macro » in a Sunday research note, according to Fortune. The numbers are “proof to combat the narrative of a murky backdrop” and should “put the bears back into hibernation mode,” he added.
“Tesla continues to play chess while other EV players are playing checkers”
Ives maintained his buy-equivalent “outperform” rating and $300 price target for Tesla after the release of the delivery data. Tesla shares rose 8.4% on Monday. Trading closed at $279.82 per share.
“This delivery number was a massive step in the right direction and is a major positive for the bulls,” Ives wrote. “Tesla continues to play chess while other EV players are playing checkers.”
Decreasing car prices bring big dividends
Some bears questioned Tesla’s decision to cut car prices. The company began aggressive price cuts at the start of the year and continued in Q2. The bears argue that this could lead to margin problems. However, Ives said the latest supply figures suggest the cut has already paid big dividends and is driving demand.
Tesla should be evaluated as a “sum-of-parts story”
The Wedbush analyst believes that Wall Street will also eventually begin to evaluate Tesla as a “sum-of-parts story.” This is a technique used by analysts that is supposed to boost consensus forecasts for a firm. When valuing by the sum of the parts, the analytics evaluate the various divisions or subsidiaries of the business separately. After that, they combine them to arrive at an overall valuation and target price for the company’s shares.
Ives believes that Tesla is much more than just an electric vehicle company and should therefore be valued by the sum of parts analysis. In doing so, he points to the Tesla Supercharger network, the energy business, AI-assisted autonomous driving technology, and the “unmatched battery ecosystem.” These are all separate parts of the company that should be valued separately.
“With this delivery beat, we believe the sum-of-the-parts story for Tesla is another step towards coming into play,” he wrote, arguing that Tesla’s “golden EV success story” is just beginning to be recognized on Wall Street.