It has also taken a beating since it announced Q3 results and missed vehicle delivery expectations.
But Deutsche Bank’s (DB) Dan Galves is sticking to his price target of $200.
That would be a 40% premium on the current price.
In a Nov. 6 note, Galves argues that Tesla “has the potential to be at the leading edge of a paradigm shift in transportation.”
He also argues that it benefits from selling directly to the customer instead of going through a dealer.
“We expect that they can achieve premium margins vs traditional automakers, as they should be able to maintain a rather substantial premium price (due to fuel / maintenance savings) despite similar cost, while also capturing much of the additional margin that normally goes to a dealer,” said Galves.
“Volume growth could be massive in the context of an 85MM unit global market. And we see meaningful competitive advantages related to the company’s supercharger network and its proprietary powertrain technology.”
Galves expects Tesla to have made 220,000 units by the end of the decade, but thinks the supply chain will probably act as the biggest risk to the company over time.
He also explains what’s behind the recent sell-off:
“We believe that the Q3 results provided positive data points on all these metrics, which we’ll go through below. While we thought the quarter was positive, expectations were very high and the stock was down substantially in after-market trading. We believe that there has understandably been significant profit-taking over the last few weeks by investors that have made substantial returns over the last 6 months.”
Musk has previously said that he thinks Tesla is overvalued.