Tesla (NASDAQ:TSLA) remains “an expensive stock,” Needham analysts said, reiterating a Hold rating on the electric vehicle (EV) giant.
Analysts believe that Tesla’s future growth drivers, such as Full Self-Driving (FSD), Robotaxi, and Robotics, are already factored into the stock price, making it overvalued by their estimates.
“We still see an expensive stock, with TSLA needing to trade at 50x our new '32 estimates discounted back to drive ~30% upside from current prices, despite TSLA operating from a trailing position in autonomous rideshare and the early stage nature of the Robotics business,” analysts led by Chris Pierce said in a note.
Needham's Tesla assumptions for the fiscal 2032 (FY32) year include the anticipation of a new, more affordable Tesla vehicle in the near term, but they remain bearish on profit margins compared to the consensus. They expect Tesla to prioritize volume over margins, which has been the company's consistent strategy.
The investment bank also predicts that Tesla will face challenges in the autonomous rideshare sector, where it operates from a trailing position, and in the nascent Robotics business.
For its FSD solution, Needham projects approximately 31 million Tesla vehicles on the road by FY32, with a 56% FSD take rate and 90% gross margins.
However, they note that this estimate may be aggressive, especially in light of comments from competitors such as Nvidia (NASDAQ:NVDA), which has described fully autonomous cars as "a next decade marvel."
As for the Robotaxi service, Needham forecasts around $100 billion in bookings for FY32, which they consider “aggressive” unless the US rideshare market expands significantly, or Tesla becomes a dominant player in the market.
The firm also estimates that Tesla will sell around 1.3 million robots by FY32, with a $30,000 average selling price (ASP) and 30% gross margins, aligning with recent company comments.
Needham's projections for Tesla's Energy Generation and Storage revenues and Services revenues in FY32 represent compound annual growth rates of 22% and 10%, respectively, from FY24.
The firm notes that Tesla's revenue will continue to be heavily reliant on automotive units, with the FSD segment poised to become a Robotaxi story based on gross profit distribution.
In sum, Needham analysts believe that Tesla's financial profile for FY32 is unlikely to justify a valuation that would lead to significant stock price appreciation, unless the company manages to dominate an expanded rideshare market.
