Cars and Drivers

What Will Drive Tesla Higher at Annual Shareholder Meeting

Tesla Motors Inc. (NASDAQ: TSLA) is scheduled to have its annual shareholders meeting Tuesday, June 9. These meetings serve to inform shareholders about the direction of the company and to recap recent developments within the past year. While Tesla is not necessarily a company looking to make quick moves or gains, the company is looking to become a dominant player in batteries and electric cars in the next decade.

In late May, 24/7 Wall St. reported that Tesla has a larger market cap than Fiat Chrysler Automobiles N.V. (NYSE: FCAU), $31 billion compared to Chrysler’s $21 billion, despite a huge gap in sales. Tesla expects to move about 50,000 cars this year, while Chrysler sold 633,000 vehicles in the previous quarter. So why the huge difference in market cap?

The explanation most Tesla optimists would offer for the difference between the two companies’ value is that Fiat Chrysler has no future. The gas-powered engine will be overtaken by demand for electric cars. Tesla’s success is based one other factor: that it will have a huge share of the electric car market a decade from now.

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In terms of sales, Tesla’s most recent forecast, as stated in its quarterly earnings report:

In Q2, we expect to produce about 12,500 vehicles, representing a 12% sequential increase. We plan to deliver 10,000 to 11,000 vehicles in Q2, and we are still on track to deliver approximately 55,000 Model S and X cars in 2015. As part of our strategy to optimize operational efficiency while scaling for higher deliveries, we are shipping cars using less expensive rail, rather than by truck, to more regions in the United States and Canada.

The company is not set to report its second-quarter results until late July. Consensus estimates from Thomson Reuters call for a net loss per share of $0.58 on $1.15 billion in revenue. In the second quarter of last year, it posted $0.11 in earnings per share on $857.51 million.

Ahead of the annual shareholders meeting, a few analyst firms weighed in on Tesla:

  • Robert Baird raised its price target to $335 from $275.
  • Doughterty has a Buy rating and raised its price target to $355 from $325.
  • Stifel Nicolaus reiterated a Buy rating and has a price target of $400.
  • Morgan Stanley has an Overweight rating and a price target of $280.

One opportunity that Tesla can take is abandoning its high price through a stock split. If Tesla decides to split its shares, nothing will fundamentally change for the company, but shares will be more attractively priced for retail investors.

Shares of Tesla were up 2% at $254.16 just after Monday’s opening bell. The stock has a consensus analyst price target of $270.78 and a 52-week trading range of $181.40 to $291.42.

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