Analyst Note| David Whiston, CFA, CPA, CFE |
Given Tesla’s stock's incredible runup, we were skeptical that its long-awaited Sept. 22 Battery Day event would meet market expectations and the stock fell about 7% in afterhours trading. We liked what we heard, though, and new products, such as Plaid Mode for the Model S due in late 2021 and a $25,000 vehicle in about three years, bring opportunities for more volume. CEO Elon Musk said he expects 2020 delivery growth of 30%-40%, which puts 2020 deliveries close to or over 500,000 versus the 400,000 we model. Based on continued strong demand for Tesla’s vehicles, we are increasing volume deliveries for 2020-29 by about 10%. This increase along with battery cost reductions outlined at Battery Day led us to increase modeled revenue for the energy storage business across 2020-29 by about 33%. As a result, we expect to increase our fair value estimate by about 13%.