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Tesla Stock to Surge 55% Near-Term, Says Piper Sandler

Wall Street firm Piper Sandler forecasted a 55% increase in Tesla stocks in upcoming stock trading. Sandler upped its price target from the $939 seen on Monday to a street-high of $2,322.

Sandler then employed a 20-year discounted cash flow valuation model to reach the target. According to its recent note, the firm also marked the increase to reflect much faster-than-expected share gains.

Moreover, the firm focused on Tesla’s software opportunity to swing long for the stock.

So far this year, Tesla’s stock has seen a surge of as much as 328 percent. However, Sandler still doesn’t recommend investors to take any profit just yet.

That said, stock market analysts still said it would be hard for its competitors to catch up. The electric car manufacturer might still be able to see its target at 500,000 cars this year, even throughout coronavirus worries. In fact, Sandler also believes it could deliver nearly 4 million cars in 2025.

If it does sell that many in five years, Tesla could capture almost 10% of the market share in the US.

Eventually, Tesla’s software, such as its full self-driving add-on, could allow the firm to sell cars below its current cost. Piper said this goal could be reached by the 2030s.

Other investors are concerned about what would happen to these estimates if the company would experience production delays. There’s also the possibility of failure to meet customer expectations, product defects, supply chain disruptions, and the slow adoption of electric cars worldwide.

Unsurprisingly, Tesla’s stock surged beyond the expectations throughout the second quarter. Musk’s company could then be eligible for inclusion into the S&P 500 after its earnings report in July.

 

Tesla’s S&P Eligibility

The Wall Street Journal first reported Tesla’s near eligibility to include the firm into the S&P 500 on Monday. As of now, the manufacturer still doesn’t meet the positive-net-income requirement.

As measured by generally accepted accounting principles, Tesla needs to post a cumulative profit for four straight quarters. Moreover, its most recent quarter also needs to show a profit.

If the firm reports another increase in its earnings report later this month, it could finally break into the record. Tesla has reported a net profit for the past three quarters: $143 million, $105 million, and $16 million consecutively.

The firm would already be a part of the index if it met market consensus in the second quarter of last year. Tesla lost $408 million during the said quarter instead of the previous $264 million which was expected.

Its eligibility now relies on its profit records on July 22, 2020, Wednesday.

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