Shares of Tesla(NASDAQ: TSLA) surged 5.5% through 11 a.m. ET on Monday, enjoying a tailwind from two separate analysts. According to a report by StreetInsider.com,Piper Sandler said that Tesla might have achieved a key milestone with its latest version of its full self-driving (FSD) software.
Meanwhile, Morgan Stanley explained why Tesla is its top pick in the automotive sector.
What Piper Sandler said about Tesla
Citing positive reviews of Tesla's latest FSD software on the social media site X (owned by Tesla CEO Elon Musk), Piper said that sales of subscriptions to the software are key to the company's profits, so the electric vehicle (EV) maker must sell more subscriptions to get profits growing again. And the key to that is developing and selling a new EV model (usually referred to as the Model 2) for under $30,000.
Piper believes that succeeding in the latter task will unlock demand for FSD subscriptions, while success in getting FSD to work will permit Tesla to quintuple its monthly charge for FSD to more than $500. The analyst sees both these trends converging around 2030.
By then, Piper said, if Tesla is selling more cheap EVs, it will have more opportunities to sell expensive self-driving software, earning high profit margins from the latter.
A cautionary note
Morgan Stanley's Adam Jonas -- a longtime Tesla fan -- is quoted on TheFly.com today saying that the stock is a buy, predicting it will rise 40% this year, while cautioning that near-term expectations for FSD could be too high.
Both analysts could turn out to be correct. Tesla might not have all the kinks worked out of its FSD software just yet, but it could by 2030, in time to profit from a surge of new Model 2 EV sales.
So does this make Tesla stock a buy? We might all have to wait six years to find out.
Should you invest $1,000 in Tesla right now?
Before you buy stock in Tesla, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Tesla wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $692,784!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of July 29, 2024
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
