Analyzing The Tesla Semi's Impact

Tesla Inc TSLA landed another customer this week when DHL and Fortigo Freight Service Inc ordered 10 of Tesla’s new electric Semi trucks to test on delivery routes. One analyst says the Semi is yet another example of the type of outside-the-box thinking that will land Tesla investors big profits in the years ahead.

The Analyst

Global Equities research analyst Trip Chowdhry maintains a Buy rating on Tesla with a $485 price target.

The Thesis

DHL joins J B Hunt Transport Services Inc JBHT and Wal-Mart Stores Inc WMT as buyers of the new electric Tesla truck. After unveiling the trucks Nov. 16, Tesla has now sold more than 200 vehicles. The company expects to be able to deliver the first of its trucks starting in 2019 at a base price of $150,000 for 300-mile range trucks and $180,000 for 500-mile range trucks.

The Tesla truck blows the competition out of the water on performance, including its ability to accelerate while driving uphill, Chowdhry said. (See Chowdhry's track record here.) 

“Betting against TSLA is not only insane but total stupidity,” Chowdhry said in a Wednesday note. 

Despite Chowdhry’s definitively bullish stance, Tesla remains one of the most polarizing stocks in the market. According to data from financial analytics firm S3 Partners, Tesla has the largest open short position of any U.S. stock.

Tesla shares are down more than 10 percent in the past three months over concerns about the stock’s lofty valuation, cash burn and production delays, but Chowdhry is not concerned.

“TSLA is creating an industry, and at this stage of [the] industry, it is not prudent to focus on margins, delivery numbers, etc. as it means nothing,” he said.

On Wednesday, Loup Ventures managing partner Gene Munster said the Semi and Roadster model unveiled this month will add a combined 10 percent to the company’s 2023 revenue.

“Assuming a $171k average selling price, we believe in 2023 the Semi can generate $6.8B in revenue and account for 9 percent of total sales,” Munster said.

Price Action

Even after the recent pullback, Tesla stock remains up 44 percent year-to-date.

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Photo courtesy of Tesla.