Piper Sandler is continuing to bet on Tesla despite the likely price cut of the company’s cars next year. Analyst Alexander Potter raised the company’s price target to $360 from $344 a share in a note to clients Thursday. He said that while Tesla’s drop in car prices may signal a demand problem for some investors, it’s actually a way to help the company solve its backlog problems. me. “In other words: Tesla is striving for higher output, shorter wait times, and lower prices,” Potter wrote. “Investors should be concerned about this outcome – not too scared – because even after the recent improvement in some regions, most consumers are still waiting too long (3-5 months). ) to get their car.” In recent months, Tesla has struggled to ramp up production at its newer car factories in Texas and Berlin as it grapples with supply chain issues, with CEO Elon Musk called both facilities “huge smelters” in an interview earlier this year. At the same time, Tesla was also forced to suspend most of its production at its Shanghai factory amid Covid-19 restrictions in China. That said, Potter believes recent upgrades to Tesla’s Shanghai facility will open up more production capacity for the electric-vehicle maker, with Piper Sandler expecting the plant to produce approximately one million units per year. “Faster production means shorter wait times,” Potter wrote. “Tesla may eventually cut prices to fill the backlog, but if so, it would be a deliberate and offensive decision.” Piper Sandler’s revised price target also takes into account the 25% price increase Tesla just announced for its complete self-driving software package. Shares of Tesla are down more than 21% this year, but Piper Sandler’s new price target implies the stock could be up nearly 30% from Thursday’s end. – CNBC’s Michael Bloom contributed reporting
