Most Expensive Tesla Vehicles Are Now More Expensive

Tesla TSLA +0.59% is currently experiencing a dramatic spike in its stock price as well as everything related to it.

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As a result of multiple price cuts Tesla (NYSE: TSLA) has faced with its vehicle prices, Tesla is now charging more for its most expensive models, the S and X. Tesla stock is being lowered on Wall Street and it has even been rated down on some occasions. But Cathie Wood, a stock analyst with ARK Invest, has raised Tesla's stock price target by a few points.

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The price of the Model X has increased from about $95,000 to about $97,500 under the staggered configuration, up from $95,000 under the plaid configuration, and up from $105,000 under the deluxe configuration. Model S is now starting at about $86,500, up $2,500 from $86,500.

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As of right now, there are just a few small price adjustments. In addition to the price reductions that were made in early April, investors should expect more price adjustments in the near future. In spite of a weakened economic outlook, Tesla seems to be playing with pricing to increase production in order to match consumer demand.

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There has been no response from Tesla regarding the cuts after a request for comments was made.

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There is plenty of evidence to suggest that the Tesla price target, set by Truist analyst William Stein, has been revised downward to $154 from $245 a share. He has also reduced his rating from Buy to Hold in part due to pricing concerns.

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Tesla's automatic-driving software, called Full Sell Driving, uses artificial intelligence (AI) to train and build its self-driving software. Stein wrote that pricing trends exacerbate Tesla's A.I. business while diminishing its core automotive business.

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Despite getting a lot of attention for Tesla's first-quarter results, Stein doesn't consider them to be shocking at all. "Our biggest surprise is TSLA's stated willingness to further reduce its prices by accepting still lower automotive margins in order to broaden and deepen its ability to generate revenue from AI projects, specific to FSD." he writes.

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It is Musk's belief that once the FSD software is good enough, many Tesla drivers will purchase it, creating a new source of high-margin income. However, FSD is still not yet an effective driver of the car. The drivers need to be engaged at 100% of the time in order to realize Musk's ambition; the exact time when FSD will be effective will not be known.

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A total of 50% of analysts covering the stock are now rating it Buy. That's down from 65% at the beginning of the year. The average analyst rating in the S&P 500 is about 58%. Since the first quarter earnings were reported after the close of the market on Wednesday, analysts have lowered their analyst price targets to $192, down roughly $10 since then.

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There does not seem to be any concern among Cathie Wood about first quarter results. This Thursday, ARK raised its Tesla stock price target to $2,000, which is still roughly 10 times the average analyst price target. Although the target is for 2027, it is still a relatively high price. According to ARK, by 2026, Tesla should have a market capitalization of $1,533 a share. (The number was $4,600, but Tesla split its stock three times.)

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There is a bear case for Ark's stock, if you can call it that, of $1,400 per share with nearly ten-fold gain over the short term.

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Wood's firm believes the self-driving automobile and robotaxi technologies are still a few years away, and he anticipates earnings of $345 billion before interest, taxes, depreciation, and amortization in 2027, approximately $155 billion of which is expected to come from self-driving technologies.

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Wood is stating a view that is a little out of the box in what is expected to be a very profitable company for Apple, AAPL -0.69% (AAPL) in the years to come, and Tesla is expected to generate about $30 billion in revenue.

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The year 2027, however, is still a long way away, and for now investors are focused on the near term. As a result of price cuts and a declining economy, investors are focusing on the near term.

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Despite a poor showing on Thursday, Tesla stock was up 0.6% in premarket trading after the company reported its first-quarter results and shares fell 9.8% on the day. S&P 500 SPX +0.07% futures were down 0.3%, while Nasdaq CompositeCOMP -0.10% futures were down 0.5%.