Reuters
- Tesla’s meteoric rise is set to continue as it capitalizes on robust growth from China, according to Wedbush.
- In a note published on Sunday, Wedbush said that in a bull scenario, Tesla could jump another 71% from current levels to $ 3,500.
- Pent-up demand for its cars in China, combined with recent price cuts, have created “a perfect storm of demand” for Tesla to take advantage of, according to Wedbush.
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Tesla’s 390% annual tournament showed no signs of slowing down, and according to Wedbush: apply it.
In a note published on Sunday, Wedbush said that in a bull-case scenario Tesla could jump another 71% from current levels to $ 3,500. Wedbush’s prior bull-case target was $ 2,500.
The catalyst that would boost the ongoing rally in Tesla shares to $ 3,500, according to Wedbush, is strong growth from China.
Pent-up demand for the Model 3 in China, combined with recent price cuts, have created “a perfect storm of demand” for Tesla to capitalize, Wedbush said.
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In the first year after its gigafactory 3 went live in Shanghai, Tesla looks forward to delivering 150,000 Model 3 units. And according to Wedbush, the Model 3 sold in China will have higher margins than Model 3s sold in the US and Europe, which “could significantly increase the profitability profile” for Tesla going forward.
By 2022, China could account for 40% of Tesla’s total sales if the company is able to meet demand, Wedbush noted.
Finally, according to Wedbush, Tesla is “back on track” to deliver 500,000 cars this year despite the COVID-19 pandemic, and it could eventually deliver 1 million units a year by 2023.
In addition to strong demand from China, Tesla’s upcoming event on September 22 could come as a surprise to investors, Wedbush said.
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New innovations and “game-changing” battery developments mean Tesla could be closer to announcing the “million-mile battery,” a battery that could potentially last decades and withstand all kinds of weather and terrain, Wedbush said.
Wedbush remains neutral on Tesla and has a 12-month price target of $ 1,900, representing a 7% downside potential.
Shares of Tesla jumped 4% in trading Monday morning, ahead of the company’s planned stock split on August 31st.
Last week, Tesla outperformed Walmart in market value. The company is now the ninth-highest rated U.S. stock.
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