Tesla Deserves Higher Valuation For 'Optionality Value,' Says Analyst — Highlights These Revenue Drivers

Zinger Key Points
  • Tesla's valuation now predominantly reflects the prospects of its electric vehicle manufacturing business.
  • An incremental $70 per share value could add to the stock if optionality value is taken into account, Bernstein says.
Tesla Deserves Higher Valuation For 'Optionality Value,' Says Analyst — Highlights These Revenue Drivers

Tesla Inc. TSLA has other optionality value, justifying a higher valuation, Bernstein analyst Tony Saccoghani Jr. said in a note.

What Happened: Saccoghani detailed the other businesses and their potential contribution to Tesla’s valuation.

FSD: The electric vehicle maker's full-self driving suite could be a major revenue driver if the company is able to develop unique capability and hold a multi-year advantage, giving scope for premium pricing, Saccoghani said. The analyst expects that it can potentially add $38 to the stock’s per-share value.

Robotaxi: By adding half of Uber Technologies Inc.’s UBER $55 billion market cap to Tesla, robotaxi would be worth about $9 per share, the analyst said. The analyst, however, isn’t hopeful that Tesla can get closer to Uber’s scale even if FSD is rolled out by the middle of the decade.

See Also: Tesla Aims To Revamp Model 3 Sedan With Eye On Reducing Complexity, Costs: Report

Insurance: Insurance, the analyst said, is a low-margin business, given the combined ratio of loss and expense for property and casualty insurance is over 90%. The analyst estimates the business’ potential contribution at $12 per share.

Energy Storage: Assuming Tesla hits an extremely aggressive target of 1,500 giga-watt-hour of energy storage capacity by 2030, the energy storage business could be worth $47 billion, or $15 per share, the analyst said. He assumes ASPs declining over time to reach $150/kilowatt-hour by 2030.

Under optimistic assumptions, Sacconaghi expects $70 per share upside opportunities from these non-EV businesses.

The analyst has an Underperform rating and $150 price target for Tesla stock.

Price Action: Tesla closed Tuesday’s session at $180.83, down 1.14%, according to Benzinga Pro data.

Read Next: How Did Elon Musk Make His Money

Posted In: Bernsteinelectric vehiclesEVsFull-self drivingTesla FSDTony SaccoghaniAnalyst ColorNewsReiterationAnalyst RatingsTech