ARK Invest analyst Tasha Keeney joined Benzinga’s PreMarket Prep on Wednesday to discuss her bullish take on Tesla Inc TSLA, what she’s looking for in today’s earnings report and why ridehailing is an important opportunity for the company.
Long-Term Outlook: Tesla shares are up 126% since CEO Elon Musk tweeted, “Tesla stock price is too high imo” on May 1. While some investors focus on Tesla’s fundamental numbers, Keeney said ARK is concerned more with Tesla’s long-term story.
“We are certainly wondering if we will get an update on Texas--their plans there for production. My latest work on Tesla has to do with ridehailing. Tesla said that they could launch a ridehailing network ahead of solving for full autonomy,” Kenney said.
Keeney said now would be a great time for Tesla to launch a ridehailing service to compete directly with Uber Technologies Inc UBER and LYFT Inc LYFT.
Watch to the full interview with Tasha Keeney in the clip below.
Musk has previously said Tesla would have more than one million robotaxis on the road by the end of 2020.
“I think they have a lot of competitive advantages to do it, so any update on the network would be awesome,” Kenney said.
Ignore The Numbers: Keeney said analysts are also expecting auto gross margins in the neighborhood of 24%.
“We’re really long-term investors, so we tend to take these short-term announcements to sort of see if that changed our long-term picture or not, which is why we look for those effective announcements that will tell us how is Tesla going to do five years from now? How many cars could they actually produce in Texas? That’s sort of the information that’s most key to us,” Keeney said.
Keeney said there’s not much the company could say on Wednesday that would concern her.
“I can’t really think of anything on the earnings call that would happen that would really concern us, but long-term risks with Tesla would be we want Elon Musk to stay on as CEO. He’s sort of a controversial guy, he’s on Twitter, he’s sort of gotten in the press for some of the comments he’s made,” Keeney said.
“Longer-term, we just like to hear about their plans.”
Tesla posted second-quarter GAAP earnings per share of 50 cents Wednesday, marking the electric automaker's fourth profitable quarter and making it eligible for inclusion in the S&P 500 index. The company reported an adjusted EPS of $2.19 and sales of $6.04 billion that beat the Street's $5.23-billion estimate.
Tesla Bull Case: Keeney said ARK has been taking profits in Tesla stock during its recent run to rebalance its funds.
“As we’ve done our research on Tesla and as you look at the auto industry in general, the stock has had an amazing run. But if you think about what’s happening now with the coronavirus, the company is becoming a clear leader, and every other automaker is going to have such a hard time putting in that extra investment and actually developing competitive EVs in a time when their core business is really on fire,” Keeney said.
For investors wondering how much upside the stock has after gaining 512% in the past year, Keeney said her bull-case price target for Tesla is $15,000 by 2024 based on its opportunity for revenues outside of auto sales.
“For that software-as-a-service model, that recurring revenue model, certainly if they are successful in autonomous, that will be huge,” she said.
Tesla's stock closed the session around $1,592 per share.
PreMarket Prep is a daily trading show hosted by prop trader Dennis Dick and former floor trader Joel Elconin. You can watch PreMarket Prep live every day from 8-9 a.m. ET here. The replay can be found on Benzinga's YouTube channel, and the podcast is on iTunes, Google Play, Soundcloud, Stitcher and Tunein.
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