Evercore ISI is presenting a different perspective for investors interested in Tesla’s stock after the electric vehicle powerhouse recorded its first annual decline in delivery numbers. Analyst Chris McNally highlighted that investing in Tesla now increasingly resembles a wager on full self-driving capabilities and their Optimus project, suggesting an enormous value ranging from $600 billion to $1 trillion as potential “call options.” Following this analysis, McNally raised the firm’s price target for Tesla from $195 to $275 per share. Despite this uptick, the target still suggests a 27% decrease from Thursday’s closing price.
The firm envisions Tesla as embodying two distinct aspects: its traditional auto business and its cutting-edge technologies in autonomous driving and robotics. They see these as different stories within the same company. Furthermore, Evercore ISI points out that Elon Musk’s close affiliations with the incoming White House administration and his camaraderie with then-President-elect Donald Trump might be beneficial for Tesla, potentially easing the path towards regulatory approvals. Tesla’s stock has performed remarkably well lately, reaching new highs after Trump’s electoral victory; shares have surged 57% since the election.
McNally expressed optimism about the Trump presidency potentially reducing regulatory hurdles for autonomous vehicles and artificial intelligence in general, which could accelerate industry commercialization. Notably, the market’s approach to this potential is significant, with the value of Tesla’s ‘call option basket’ rising to $900 billion, reflecting a market sentiment that attaches a 50% likelihood of success to these advancements.
