Tesla Inc. stock closed at its best level in years on Friday, and BofA Securities recently wrote about reasons why it can keep going up.
Dow Jones Market Data shows that the stock of the leader in electric vehicles, TSLA +5.34%, finished 5.3% higher at $389.22 per share. This was the highest closing price for shares since January 3, 2022, when they ended at $399.93. The stock is now down about 5% from its all-time high of $409.97 per share on November 4, 2021.
Dow Jones Market Data says that the company’s market capitalisation has once again topped $1.2 trillion. It closed at $1.249 trillion on Friday, beating the previous record of $1.235 trillion, which was also set on November 4, 2021.
In a note to clients on Thursday, BofA analyst John Murphy said that he still thinks the stock is a buy and raised his price target from $350 to $400.
He made his more optimistic call after saying that a trip to Tesla’s gigafactory in Austin, Texas, which included a tour of the factory and a ride-and-drive session, gave him “increased confidence” in the company’s growth story.
For one thing, Murphy thinks that the core EV business will be able to reach more people when cheaper cars come out in the first half of 2025. With the current EV tax credits, these cars should cost less than $30,000.
The company also said that the cheap model would not be the only new car it would make in 2025, Murphy wrote.
Murphy said that Tesla also showed off the Full Self-Driving feature of its cars on the tour. He said that it was “impressive and much improved” from earlier versions.
He said that the things that were seen show that Tesla is “near the point” where it could start its robotaxi business safely.
Murphy also said that the Optimus robot, which was shown off at Tesla’s robotaxi event in October, is “real” and that work on it will speed up.
Tesla wants to have about 1,000 Optimus robots by the end of 2025, most of them in its plant. Murphy thinks that as Tesla’s robotaxi technology improves, more resources will become available for Optimus.
The powers of Optimus will improve faster because of this, and production will rise in 2026 and beyond, which will help keep costs low, Murphy wrote.
At the same time, Tesla may need to sell shares to raise money because it has been investing a lot in robotaxis, robots, and artificial intelligence, and its stock is close to all-time highs.
“At its current value, [Tesla] could raise more than $50 billion through an equity raise with only a 4% to 5% loss for shareholders,” Murphy wrote.
This year, the stock has gone up 56.6%, while the S&P 500 index SPX +1.25 % has gone up 27.7%.
