Tesla’s profits have broken all records. His stock has reached “exhaust speed”.


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Electric vehicle giant Tesla announced record operating profit on Wednesday evening.

Andrew Caballero-Reynolds / AFP via Getty Images

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posted record operating profits for the second consecutive quarter. Things are going pretty well for the electric vehicle giant.

“People want to buy an electric car, and people want to buy a Tesla right now,” CFO Zachary Kirkhorn said on the company’s earnings conference call. “It’s very exciting for us.

Wall Street, for the most part, agrees with this sentiment. Analysts are impressed with Tesla’s profitability (ticker: TSLA) and see better days ahead. Price targets are up after a strong quarter.

Morgan Stanley analyst Adam Jonas suggested in his Thursday report that Tesla could be considered the world’s most profitable consumer car maker. (Tesla is more profitable than most, but doesn’t make the millions of vehicles other automakers make.) “What’s particularly noteworthy is Tesla’s margin performance despite cost inflation,” he said. he added. Tesla is paying more for shipping and for semiconductors, which are still scarce.

Jonas evaluates buying Tesla shares. Its price target is $ 900 per share. New Street Research analyst Pierre Ferragu, who also rates stock buying, broke that target price after earnings. He raised his price target to $ 1,298 from $ 900. That’s the new high street price target and values ​​Tesla at around $ 1.3 trillion.

Tesla has hit “exit speed,” according to Ferragu, who pointed out in a Thursday report that Tesla’s profit margins are about double that of a typical automaker. He feels better about the company’s long-term prospects, writing that Tesla’s position has “grown stronger.”

Elsewhere, RBC analyst Joseph Spak is pricing Tesla Hold stocks, although he raised his target price after Tesla’s report from $ 755 to $ 800.

Spak was also impressed with the margins, but warned investors not to expect further improvement for a few quarters. “The Austin and Berlin factories are launching [and] will face ramp inefficiencies, ”he wrote in a note on Thursday. Austin, Texas and Berlin are Tesla’s two new manufacturing plants. Tesla “is also seeing increases in commodity costs and the impact of labor shortages as well as higher logistics costs,” Spak noted.

Looking ahead, Wedbush analyst Dan Ives called the surges in Austin and Berlin the key to Tesla’s growth for the next 18 months. With Austin and Berlin at full capacity, arriving 12 to 18 months after start-up, Tesla will have around 2 million units of annual capacity. Wall Street expects Tesla to deliver around 860,000 vehicles in 2020.

Ives, like Ferragu and Jonas, values ​​Tesla shares at Buy. Its new price target is $ 1,100 per share, increased by $ 100 after the quarter.

Everyone seems impressed, even the bears. Barclays analyst Brian Johnson noted a strong margin performance in his report on Thursday. He has also had positive reviews of Tesla’s insurance products, which it rolls out based on driving behavior and usage. Johnson did not increase his price target, although he did raise it to $ 300 from $ 230 about a week before the earnings report. Johnson assesses the sale of Tesla shares.

Tesla stock rose 3.3% at noon Thursday to $ 894, as analysts’ average price target rose nearly 6% from around $ 669 to $ 706 per share. The

S&P 500

was up 0.3%, and the

Dow Jones Industrial Average

has changed little.

Stocks don’t always rise in response to rising earnings or rising target prices. The market, as always, is looking to the future, and Tesla stock rose about 12% between the time the company announced third-quarter deliveries on October 2 and the earnings release on Wednesday night. The

Nasdaq Composite

increased by about 4% over the same period.

Tesla stock is currently trading at around 115 times the estimated numbers for 2022. It’s not too rich for the bulls. Ferragu believes Tesla is expected to trade at 75 times its estimated profit of $ 17.30 per share in 2024. He sees Tesla delivering 2.4 million vehicles that year.

Write to Al Root at [email protected]

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