Gary Black Predicts Tesla Will Rise to $478
On Wednesday, Gary Black, Managing Partner at The Future Fund LLC, set a target price of $478 for Tesla shares, presenting an optimistic outlook. The electric vehicle manufacturer's shares saw a significant increase, rising by 4.7% on Wednesday and over 60% since the U.S. presidential election. Black's price target is based on the highest level in the last three years, the November 2021 145x P/E ratio, and adjusted earnings per share estimates of $3.30 for the fiscal year 2025.
Black identified several positive catalysts that could enhance Tesla's stock value. These include expectations that the Federal Reserve will lower interest rates by an additional 25 basis points next week and a potential Full Self-Driving (FSD) licensing agreement. Furthermore, a streamlined process for obtaining autonomous driving licenses at a national level could benefit the company. The Model Q Compact, expected to launch in the first half of the year, is projected to replicate Tesla's successful performance in 2020.
Additionally, Tesla is expected to be the first company to enter the market with generalized, unsupervised FSD by the end of fiscal year 2025. The Delaware Supreme Court is expected to overturn Judge McCormick's 2018 compensation ruling by late 2025, which could be favorable for Tesla. Moreover, the transparency and progress in the production of the Optimus robot, set to commence in fiscal year 2026, are also seen as positive factors for the company's stock.
On the other hand, Black pointed out potential negative catalysts that could impact Tesla's valuation. These include the possibility of President Trump abolishing the $7,500 IRA electric vehicle purchase credit and Tesla's inability to offer a new, cheaper vehicle model in the first half of 2025. Other concerns include the postponement of the robotaxi service until 2026 and overly optimistic delivery expectations of 511,000 units for the fourth quarter of 2024. Lastly, Tesla's projected P/E ratio of 121x in 2025, which would be the highest in the last three years, is also considered a potential downside risk.