It’s been a banner year for Tesla. From buying $1.5 billion of Bitcoin to the partnership with Hertz — which made the company hit the $1 trillion market cap — it navigating supply chain disruptions better than many of its peers, enabling strong deliveries. The auto manufacturer certainly dominated headlines in 2021, with CEO Elon Musk — the richest man on the planet and Time’s Person of the Year — selling billions of its shares. Now, some analysts say that 2022 will continue to be favorable to Tesla, with the electric vehicle (EV) company’s stock potentially rising nearly 30%, thanks in part to increasing China demand.
In a note sent to GOBankingRates, Wedbush Securities’ Daniel Ives wrote that the stage is now set for EVs to take a significant step forward in driving customer adoption in this green tidal wave, with many winners as part of the biggest transformation to the auto industry since the 1950s.
“Musk & Co. have navigated the chip supply shortages better than any automaker globally over the last six months, which is why Tesla is in a clear position of strength heading into 2022 with an inflection point year ahead,” Ives wrote.
He added that there are three main catalysts for Tesla in 2022, that if successful, “will be a major driver of the stock moving higher with our current base case price target at $1,400 and bull case at $1,800.” Wedbush maintained its “Outperform” rating.
China is a key variable in the Tesla bull thesis, which Ives estimates will represent 40% of deliveries for the EV maker in 2022. While the chip/component shortage remains a headwind for Tesla (and every other automaker), Ives said this is a transitory issue. “We estimate the China story is worth $400 per share to the Tesla story for 2022,” he wrote in the note.
The second driver for Tesla’s performance in 2022 is the opening of new Gigafactories in Berlin and Austin, which will alleviate the bottlenecks of production for Tesla globally, according to the note. Wedbush estimated that by the end of 2022, Tesla will have the capacity for approximately 2 million units annually from roughly 1 million today.
Finally, while supply chain issues have been an issue for overall unit growth for Tesla in 2021, Wedbush noted that over the coming year, this dynamic will significantly moderate, with potentially 1.4 million to 1.5 million units now within reach annually for 2022. “While China will be a key growth driver, we believe demand is building for Tesla’s Model Y in the US and Europe with 2022 likely another ‘breakout year’ for Tesla and the EV industry,” Ives wrote.
Tesla is up 54.25% year-to-date, according to Seeking Alpha. On Dec. 28, Musk sold an additional $1 billion worth of Tesla shares, according to Securities and Exchange filings. Musk has sold billions in Tesla stock since his Twitter poll in November in which he asked his followers whether he should sell 10% of his Tesla shares. As GOBankingRates reported, Musk has a looming tax bill of more than $15 billion. He was awarded options in 2012 as part of a compensation plan, and because he doesn’t take a salary or cash bonus, his wealth comes from stock awards and the gains in Tesla’s share price. The options are set to expire in August next year. In order to exercise them, he has to pay income tax on the gain.
On Dec. 19, Musk tweeted, “For those wondering, I will pay over $11 billion in taxes this year.”
MarketWatch reports that the attest sale brings his total to about 15.8 million shares unloaded since November, and the stock sales have been worth a little over $16 billion. He has also exercised about 22.8 million stock options — all of his vested options that would have expired next year.
On Dec. 22, he tweeted that “There are still a few tranches left, but almost done.”
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