RBC Capital set a higher price target for Tesla (NASDAQ:TSLA) shares Tuesday, raising it to $236 from the previous $224, while maintaining an Outperform rating on the electric vehicle manufacturer.
The adjustment comes in anticipation of Tesla's Robotaxi day, an event that the firm believes is significant due to the business potential it unveils.
"For the first time, it will highlight a business that represents $153B of Revenue for Tesla, 63% of our valuation," said the analysts.
The optimism around this service is rooted in the expectation that Robotaxis could generate a staggering $1.7 trillion in global revenues by the year 2040.
The RBC Capital analyst pointed out that the Robotaxi market is expected to be competitive, with various players sharing the market space. This includes fleet operators, application providers, car manufacturers, and software developers. The firm underlines the importance of this market, noting that the revenues from Robotaxi services would likely come with much higher margins compared to traditional automotive revenues.
In other recent news, Tesla has reported its third-quarter deliveries at approximately 462,000 units, closely matching the consensus estimate of 463,000. Expectations for the fourth quarter of 2024 are higher, given the previous year's sales of about 484,000 units in the same period.
To stimulate demand amidst challenges, Tesla has initiated financing offers in the United States and China. The company is also preparing to issue $783 million in bonds secured by automotive leases to generate capital. Additionally, Tesla's stock price target was recently raised by HSBC analyst Michael Tyndall to $124 from the previous $118.
Tesla Inc. is set to develop four new versions of its in-house battery cells, designed to power a range of electric vehicles including the anticipated Cybertruck and a forthcoming robotaxi. The company aims to incorporate dry cathodes into Cybertruck batteries by mid-next year and plans to produce between 2,000 and 3,000 Cybertrucks weekly using this new technology.
InvestingPro Insights
To complement RBC Capital's optimistic outlook on Tesla's Robotaxi potential, recent data from InvestingPro offers additional context on the company's current financial position. Tesla's market capitalization stands at an impressive $769.37 billion, reflecting its dominant position in the electric vehicle market and investor confidence in its future prospects, including the Robotaxi initiative.
An InvestingPro Tip highlights that Tesla "holds more cash than debt on its balance sheet," which could provide the company with the financial flexibility needed to invest in and develop its Robotaxi technology. This strong cash position aligns with the potential for high capital expenditures typically associated with cutting-edge automotive and AI developments.
However, it's worth noting that Tesla's P/E ratio is currently at 62.26, which an InvestingPro Tip describes as "trading at a high earnings multiple." This valuation suggests that investors are pricing in significant future growth, potentially including the success of the Robotaxi business that RBC Capital has emphasized.
For investors seeking a more comprehensive analysis, InvestingPro offers 21 additional tips on Tesla, providing a broader perspective on the company's financial health and market position as it ventures into the Robotaxi market.
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