2013 Tesla Model S

Tesla Motors stock sharply up on auto-pilot feature for 2016, and analyst buy recommendation

A "buy" recommendation by a Deutsche Bank stock analyst may have sent Tesla Motors (TSLA) stock price sharply upward, or was it the news that Tesla is developing an auto-pilot feature?
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After two weeks where the Tesla Motors (TSLA) stock price was fairly steady, on Thursday their stock jumped by over $10 a share ($166.12/share to $177.54/share) and again on Friday TSLA's price is significantly higher, briefly touching $185/share and as of this writing sitting at $182.30/share. According to the financial press this was due to a stock analyst raising the TSLA price target from $160/share to $200/share, but there's also this exciting bit of news about Tesla's plan to develop driverless cars.

Deutsche Bank analyst Dan Graves recently raised his price target to $200 from $160, keeping his "buy" rating. Be based this opinion on recent discussions with Tesla Motors management, and monitoring "owners blogs" (which would include the teslamotorsclub.com forum). As a result of this sleuthing, Graves believes that Tesla will significantly outperform the guidance for the 3rd quarter. A report on thestreet.com quotes Graves saying "...demand has continued to grow in the US and Europe (despite substantial option pricing increases in effect as of late July), and that the production rate at Tesla's factory has continued to increase."

Tesla's corporate problem is to maintain profitability while dealing with loss of revenue because income from ZEV Credit sales is declining. Historically Tesla has earned a fair bit of income from selling ZEV Credits to manufacturers who need ZEV credits to continue being able to sell cars in California. The market for those credits is drying up, and Tesla has warned stock analysts that by the fourth quarter they may have $0 revenue from ZEV Credits. During the Q2 2013 financial results conference call, Elon Musk claimed that by the end of 2013 they'll improve the business to where Tesla get 25% profit on each car sold, but that means a lot of work during Q3 and Q4 to improve that much. Graves believes Tesla is well on its way to that goal.

Because Tesla Motors also looks like a story-and-hype driven stock, the TSLA stock price may be due to recent stories about Tesla Motors. Significantly, the news that Tesla is developing an "auto-pilot" feature for the 2016 Model S and Model X is a story which is causing quite a stir in the press.


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