On Wednesday, The Future Fund LLC's Managing Partner, Gary Black, outlined a bullish outlook for Tesla (NASDAQ:TSLA) shares, setting a price target of $478. The electric vehicle maker's stock has seen a significant increase, climbing 4.7% on Wednesday and accumulating a rise of over 60% since the U.S. Presidential election. Black's price target is based on a PE ratio of 145x from November 2021, which was the highest in three years, and adjusted EPS estimates for FY 2025 of $3.30.
Black identified several positive catalysts that could drive Tesla's stock value. Among these are expectations of a Federal Reserve rate cut by another 25 basis points next week and a potential Full Self-Driving (FSD) licensing deal. Additionally, a streamlined process for securing autonomous driving licenses nationally could benefit the company, as well as the anticipated launch of the Model Q Compact in the first half of the year, which is expected to mirror the success of Tesla's 2020 performance.
Moreover, Tesla is projected to be the first to market with generalized unsupervised FSD by the end of FY 2025. The Delaware Supreme Court is also expected to overturn Chancellor McCormick’s 2018 compensation ruling late in 2025, which could be favorable for Tesla. Furthermore, transparency and progress in the production of the Optimus robot, set to begin in FY 2026, are also seen as positive factors for the company's stock.
On the other hand, Black also pointed out potential negative catalysts that could impact Tesla's valuation. These include the possibility of President Trump eliminating the $7,500 IRA EV purchase credit and Tesla's failure to introduce a new, cheaper vehicle form factor in the first half of 2025. Other concerns include a delay in the launch of the robotaxi service into 2026 and overly optimistic delivery expectations for the fourth quarter of 2024, with a forecast of 511,000 units. Lastly, a PE ratio of 121x for Tesla in 2025, which would be the highest in three years, is also considered a potential downside risk.
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