Langan began coverage of Tesla on Monday, assigning a target price of $590. At the time, Tesla stock was still below Langan's target, though it has since risen above it. Langan commented that the target already factored in Tesla's delivery numbers, as well as the recent selloff that drove Tesla's stock down well below its record high from January.
There are factors, however, that threaten Tesla's share price and its wide prospects as a company. One issue as of late is the rising costs of materials needed in the construction of Tesla vehicles, from microchips to lithium.
"Fortunately, Tesla typically locks in longer-term contracts for these materials mitigating the near-term impact and putting the total impact at the lower end of the range. However, as these contracts renew, there should be an additional $1,375 cost per vehicle from this rise, which would cut into margins," Langan penned in his initial analysis.
In addition, much of Tesla's market growth can be attributed to the company's presence in China, where the firm is currently experiencing negative PR, including a well-publicized incident at the Shanghai Auto Show that may have even pulled Tesla shares down as a result. Tesla's situation in China also prompts concerns along another avenue; increasing competition.
Domestic EV makers in China flourished while Tesla suffered from hiccups, and at the same time, Tesla's competition in the United States appears to be rapidly intensifying, especially after the recent reveal of Ford's