Shares of Tesla (TSLA) got smacked down in early July after reporting weaker-than-expected deliveries, but have made back a big chunk of those losses following the launch of its Model 3. But can Tesla break out to a new high?
Baird’s Ben Kallo contends it can. In raising his target price to $411–from $368–Kallo argues that the total addressable market for the Model 3 “will likely be underestimated.” He explains:
We expect strong demand for the Model 3 and believe the total addressable market will likely be underestimated, but think it will be an ongoing process to ascertain global demand. In the details section, we outline several ways to evaluate potential Model 3 demand in the United States, including total car sales (~6.9M units in 2016), luxury sedan sales in the United States (~1M units), and comparable vehicle sales (~409k units). Importantly, Elon Musk estimates Model 3 demand could be as high as 700k units per year.
Shares of Tesla have gained 2.4% to 2.4% to $366.33 at 9:43 a.m. today.
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