Wedbush's Dan Ives thinks "now is NOT the time to throw in the towel" on Tesla Inc. TSLA despite increasing negativity surrounding the EV maker. He added that Tesla's AI technology, aided by Full Self-Driving (FSD), could drive the EV maker's market capitalization to over $1 trillion.
What Happened: Ives expressed that Tesla’s AI and Full Self-Driving (FSD) advancements could propel the company’s valuation beyond $1 trillion. Despite a slow first quarter, the firm anticipates the possibility of Tesla reaching 2.1 million units in 2024.
"We believe the risk/reward is extremely compelling at these levels with the AI story and FSD making major strides at Tesla," Ives said.
Ives believes AI and FSD could drive the next phase of Tesla's growth story and help it cross $1 trillion in market capitalization.
Musk has previously voiced his displeasure over compensation and the lack of 25% voting control in the company he co-founded.
“I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that I can’t be overturned."
For context, Tesla is currently working on its own humanoid robot – Optimus. It also has the Dojo supercomputer project, designed for vision processing and recognition.
The Dojo supercomputer project is powered by market leader Nvidia Corp.'s NVDA A100 and H100 GPUs and is being used to develop FSD.
Wedbush has maintained its outperform rating for Tesla with a $315 price target.
"Now is NOT the time to throw in the towel on Tesla…we have a high level of conviction at current levels despite the dark black clouds forming," said the latest note by Wedbush.
What Tesla's Board Needs To Do To Avoid The ‘Category 5 Hurricane'
The firm has suggested three key measures for Tesla’s board to alleviate the “Category 5 hurricane” over Tesla’s stock.
These include creating a new compensation package that superseded the 2018 one, a plan to increase CEO Elon Musk’s voting share to 25%, and a potential move to Texas to nullify the noise surrounding the Delaware ruling.
Why It Matters: Earlier in February, Wedbush’s Dan Ives had urged Tesla’s board to ensure Musk’s continued leadership role at Tesla through 2030 by offering a new compensation package, particularly in the areas of AI and FSD.
Amid the ongoing compensation dispute and a slump in price, Tesla remains a favorite target for short sellers, retaining its position as the most-shorted large-cap stock in the U.S. for the second consecutive month in February.
Analysts believe that for Tesla’s stock to rebound, the company needs to address its earnings revisions over the past 12-plus months.
Price Action: Tesla’s stock closed at $173.88 on Tuesday, down 2.06%, according to Benzinga Pro.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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