Tesla Inc. (NASDAQ:TSLA) could see significant growth from a new budget electric vehicle offering, according to a prominent investor Gary Blackwho raised his price target for the EV maker by 27% to $380 from $300 on Monday.
What happened: Zwart, Managing Partner at The Future Fund LLCattributes his “increased conviction” to expectations that Tesla will launch a $25,000-$30,000 hatchback model, potentially capturing about 15% of the global compact car market.
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Its revised earnings estimates exceed the Wall Street consensus, predicting adjusted earnings per share of $3.80 for 2025 and $17.00 in 2030.
The investment thesis comes amid Black’s recent portfolio adjustments. In November, his fund cut its Tesla position to $351 after the stock price rose 150% from its April low. The Future Fund’s Tesla investment strategy has proven profitable, with an average purchase price of $162 and a sale price of $252 since the beginning of 2023.
Tesla is among the top five positions The Future Fund Active ETF (NYSE:FFND).
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What happened: Black identified several potential catalysts for Tesla, including continued EV usage growth of 20-25% per year, greater adoption of full self-driving, and a possible streamlining of the autonomous driver’s license under the 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.
The revised target reflects Black’s confidence in Tesla’s long-term growth, using a PEG ratio of 1.75x and expected 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 the November election was driven primarily by price-to-earnings growth and not earnings estimate revisions.
Price promotion: Tesla closed at $389.79 on Monday, up 0.15% for the day. In after-hours trading, the stock rose further to $392.35, a gain of another 0.66%. Year to date, Tesla shares are up 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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This article Gary Black raises Tesla price target 27% to $380 on ‘increased belief’ the Elon Musk-led company will launch a $25,000 hatchback originally appeared on Benzinga.com
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