- Bank of America on Wednesday raised its Tesla price target from $ 350 to 50 550, which is about 16% higher than Monday’s close.
- Tesla on Tuesday announced plans to sell up to 5 5 billion in new shares, capitalizing on its latest rally.
- The announcement was “proof of our thesis that TSLA will use its stock to raise capital through low-cost equity ing fur, further cement its position as a dominant EV automaker, to accelerate global aggressive capacity building plans and drive units / revenue significantly higher.” Analysts led by John Murphy wrote in a note.
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According to Bank of America, Tesla’s stock is expected to rise further in the next 12 months after its proposed $ 5 billion equity offering.
On Wednesday, the payroll firm raised its Tesla price target from $ 350 to 50 550, a close of about 16% on Monday. Tesla on Tuesday announced plans to sell up to 5 5 billion in new shares, capitalizing on its latest rally.
“In our view, yesterday’s announcement was a testament to our thesis that TSLA will use its stock to raise capital through low-cost equity ingings fringes, further cement its position to accelerate aggressive capacity building plans globally and drive units / revenue significantly higher. The dominant EV automaker, ”analysts led by John Murphy wrote in a note.
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Shares of Tesla fell as much as 8% in intraday trading on Wednesday.
Murphy said the new price target came when Bank of America advanced its “sliding scale of valuation based on the theoretical growth opportunity that TSLA gets.” Bank of America confirmed its “neutral” rating on the auto toe manufacturer’s stock.
Bank of America said it sees Tesla using its high stock price to raise more money through the sale of shares, which boosts cash holdings that could be used to boost future revenue growth.
“It’s important to recognize that TSLA’s stock moves up and down, raising funds for cheaper capital growth, which is provided by investors along with the stock’s share price,” Murphy said. Is, and it is this self-fulfilling prophecy that appears to explain the extreme movement of the TSLA stock and its upside and loss. “
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While Tesla’s “hyper-growth doesn’t necessarily require self-funding,” it doesn’t have to be as long as the company has access to very low-cost capital, Murphy said.
“Simply put, TSLA is a new disruptive (auto) company that may or may not be dominant in the long run, but it doesn’t matter because it can fund outside growth with an expansion of almost no cost capital driving capacity. He said.
Tesla has grown by about 435% to date.
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