BofA says visit to Giga Texas confirms that FSD progress supports a 2025 robotaxi launch, and Optimus is ‘real’
Shares of Tesla Inc. powered to their highest close in years on Friday, and BofA Securities recently laid out reasons why they can continue to rally.
The electric-vehicle leader’s stock TSLA+5.34% closed 5.3% higher to $389.22 per share — its highest closing level since Jan. 3, 2022, when shares ended at $399.93, according to Dow Jones Market Data. The stock is now roughly 5% off from its record close of $409.97 a share on Nov. 4, 2021.
The company’s market capitalization has once again surpassed the $1.2 trillion threshold, closing at $1.249 trillion on Friday to break the previous record of $1.235 trillion, also set on Nov. 4, 2021, according to Dow Jones Market Data.
Read: Tesla’s market cap tops $1 trillion after another Trump-fueled jump for the stock.
BofA analyst John Murphy reiterated his buy rating on the stock in a Thursday note to clients, raising his price target to $400 from $350.
His more bullish call was made after he said a visit to Tesla’s gigafactory in Austin, Texas, which included a factory tour and a ride-and-drive session, gave him “increased confidence” in the growth story.
For one, Murphy believes the core EV business will see its addressable market expand with the launch in the first half of 2025 of lower-cost vehicles, which are expected to cost less than $30,000 with current EV tax credits.
“[Tesla] also confirmed that the low-cost model won’t be its only new model in 2025,” Murphy wrote.
On the tour, Murphy said Tesla also showcased its cars’ Full Self-Driving feature, which he called “impressive and much improved” from previous versions.
He said the capabilities witnessed suggest Tesla is “near the point” at which it could safely launch its robotaxi business.
And regarding the Optimus robot, which was highlighted at Tesla’s robotaxi event in October, Murphy said it is “real,” with development set to accelerate.
While Tesla plans to have about 1,000 Optimus robots by the end of 2025, mostly in its plant, Murphy expects the resources available for Optimus will grow as its robotaxi technology matures.
“This will drive an acceleration in the capabilities of Optimus, and ultimately lead to increased production in 2026+, thereby helping drive costs down,” Murphy wrote.
Meanwhile, there’s a good chance that all of this investment in robotaxis, robotics and artificial intelligence, coupled with the stock near record levels, will push Tesla to raise capital through the sale of shares.
“At its current valuation, [Tesla] could raise [more than] $50 billion through an equity raise at a relatively modest 4% [to] 5% dilution to shareholders,” Murphy wrote.
The stock has run up 56.6% this year, while the S&P 500 index SPX+0.25% has advanced 27.7%.