Tesla Inc. TSLA could see significant growth from a new budget electric vehicle offering, according to prominent investor Gary Black, who raised his price target for the EV maker by 27% to $380 from $300 on Monday.
What Happened: Black, Managing Partner at The Future Fund LLC, attributes his “increased conviction” to expectations that Tesla will launch a $25,000-$30,000 hatchback model, potentially capturing approximately 15% of the global compact car market.
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His revised earnings estimates surpass Wall Street consensus, projecting adjusted earnings per share of $3.80 for 2025 and $17.00 by 2030.
The investment thesis comes amid Black’s recent portfolio adjustments. In November, his fund trimmed its Tesla position at $351 after the stock surged 150% from April lows. The Future Fund’s Tesla investment strategy has proved profitable, with an average purchase price of $162 and a selling price of $252 since early 2023.
Tesla ranks among the top five positions for The Future Fund Active ETF FFND.
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What Happened: Black identified several potential catalysts for Tesla, including continued EV adoption growth of 20-25% annually, increased Full Self-Driving adoption, and possible autonomous driving license streamlining under President-elect Donald Trump‘s administration.
However, he also noted key risks, including the potential elimination of the $7,500 EV tax credit and regulatory challenges for autonomous driving features.
The revised target reflects Black’s confidence in Tesla’s long-term growth, using a PEG ratio of 1.75x and projected long-term EPS growth of 25%. Despite his optimistic outlook, Black recently expressed caution about Tesla’s current valuation, noting that the stock’s 50% rise since November’s election has been driven primarily by P/E expansion rather than earnings estimate revisions.
Price Action: Tesla closed at $389.79 on Monday, up 0.15% for the day. In after-hours trading, the stock rose further to $392.35, gaining an additional 0.66%. Year to date, Tesla shares have surged by 56.91%.
According to data from Benzinga Pro, Tesla has a consensus price target of $251.06 from 34 analysts, ranging from a high of $411 to a low of $24.86. The latest ratings from Deutsche Bank, Guggenheim, and BofA Securities average $315, implying a 19.71% downside.
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