Tesla maintains “Overweight” rating from Piper Sandler

Tesla stock (NASDAQ:TSLA) received a reiterated “Overweight” rating and a $300 per share price target from Piper Sandler. The firm’s insights came after analysts hosted two events that were focused on Tesla’s energy division and the company’s Full Self-Driving (FSD) program. 

As noted in an Investing.com report, Piper Sandler’s first event involved a visit to the Lathrop Megafactory, which produces the electric vehicle maker’s Megapack batteries, as well as an FSD webinar with Elias Martinez, the creator of the community tracker that monitors data from Tesla’s FSD program. The firm also urged investors to own TSLA stock ahead of the company’s planned dedicated Robotaxi event this coming October 10, 2024. 

Tesla Energy has seen a notable rise over the past few quarters, with the business seeing record deployment in Q2 with 9.4 GWh of total deployments. Tesla Energy also achieved record revenues and gross profit during the quarter. A lot of this was due to the ramp of the Megapack at the Lathrop Megafactory. 

Piper Sandler analysts had a number of takeaways following their visit to Tesla’s Lathrop Megafactory. Following are five of the most notable. 

1. Competition is rising in the stationary battery storage market, but global demand remains strong. 
2. By 2030, the market will need about 2 TWh of batteries. That’s an estimated 20x increase from the industry’s 2023 levels. 
3. To win contracts, Tesla leverages its ecosystem, which includes its software and inverters, instead of focusing its strategy on offering the lowest prices in the segment. 
4. Each Megapack battery can weigh over 80,000 pounds. This makes shipping costly, and it highlights the need for local production. 
5. Tesla Energy operates on a project basis, which leads to fluctuations in quarterly results. 

FSD is steadily becoming an increasingly important part of Tesla’s business. The progress of the program itself has been very impressive, with users reaching 1.6 billion cumulative miles driven with FSD as of the end of the second quarter.

Following are Piper Sandler’s takeaways from its FSD webinar. 

1. Data submissions to the Tesla FSD community tracker tend to increase in the one or two months following the release of new FSD versions.
2. Participants in the tracker are generally diligent, level-headed, and objective. They also use FSD regularly. Piper Sandler analysts noted, however, that biased outliers can be identified and removed from the data. 
3. The latest FSD version, V12.5.x, can travel 220-251 miles between critical disengagements. This represents an improvement over previous iterations. 
4. Despite v12.5.x seeing some improvements, its overall performance has slightly regressed since its initial release. This was potentially due to Tesla preparing it for Hardware 3.0 vehicles. 
5. Observing the system’s improvement trend is more useful for understanding FSD’s progress, instead of tracking exact numbers. 

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