Piper Sandler More Than Doubles Tesla Price Target, Sees 'Most Consequential Company' In Mobility

Tesla Inc TSLA can generate operating margins in the mid-20s due to its full self-driving software, according to Piper Sandler.

The Tesla Analyst: Alexander Potter maintained an Overweight rating for Tesla and raised the price target from $939 to $2,322.

The Tesla Thesis: Tesla’s stock has appreciated by 260% year-to-date, taking its market cap past $280 billion and making the company the world's most valuable automaker, Potter said in a Monday note. (See his track record here.)

That doesn't mean it's time to sell the stock, the analyst said. 

“Tesla is the most consequential company in the mobility ecosystem, and this is unlikely to change in the next decade.” 

Tesla has indicated the possibility of 30% gross margins if more customers opt to purchase the company's FSD software, he said. 

Given that the FSD package is a high-margin offering, Tesla could sell vehicles at or even below cost by the 2030s, boosting its operating margins, Potter said. The analyst further projected that Tesla could earn a mid-20s operating margin by 2040 even if less than half of its users opt in for FSD.

For the near-term, the key driver for Tesla's earnings are deliveries, and they remain higher than expected, he said. 

Tesla could reach nearly 4 million deliveries in 2025, implying a market share of about 7% in China and 9.5% in the U.S., according to Piper Sandler. 

TSLA Price Action: Tesla shares were down 0.88% at $1,483.92 at the time of publication Tuesday.

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Photo courtesy of Tesla.