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Tesla Plans to Expand Giga Berlin; Analysts See 22.5% Upside

Story Highlights

Tesla looks to expand the Giga Factory in a step that could lighten up Tesla shareholders’ mood in a generally dull market. The expansion plan also highlights Tesla’s high hopes for its European hub.

Tesla (TSLA) is seeking to expand its European manufacturing hub based in Germany, which opened in March. The plant, Giga Berlin, could produce as many as 500,000 cars annually at full capacity. 

According to a Reuters report, Tesla has sought the approval of local authorities to construct a freight station, logistics facility, and parking spaces next to its existing factory complex. The electric automaker plans to build the additional facilities on 100 hectares east of the factory. Tesla’s existing Giga Berlin complex sits on 300 hectares and includes an auto factory and a battery plant under construction. 

Water Concerns Amid Expansion Plans

According to the report, the local municipality is expected to discuss Tesla’s plant expansion proposal on June 2. Tesla faced licensing delays for its existing Giga Berlin facility amid pushback from some environmentalists. As Tesla seeks to expand the hub, the concern is that local water resources may be insufficient to support its expanded operations. 

Wall Street’s Take

On May 27, Credit Suisse analyst Dan Levy reiterated a Buy rating on Tesla, with a price target of $1,125, which indicates 48% upside potential.

The rest of the Street is cautiously optimistic about Tesla stock with a Moderate Buy consensus rating. That’s based on 14 Buys, 10 Holds, and six Sells.  The average Tesla price target of $930.55 implies 22.5% upside potential to current levels.

Stock Investors

TipRanks’ Stock Investors tool shows that investor sentiment is currently Positive on Tesla, with 2.5% of portfolios tracked by TipRanks increasing their exposure to TSLA stock over the past 30 days.

Key Takeaway for Investors 

The facilities that Tesla plans to add to its Giga Berlin hub, such as the freight station, could unlock additional service revenue streams for the company beyond selling cars. Moreover, the additional facilities could go a long way towards boosting the hub’s efficiency. 

Therefore, the Giga Berlin expansion plan could reignite interest in Tesla shares. Tesla stock has dropped about 37% year-to-date, mostly falling alongside the broader market. However, China’s COVID-19 lockdowns, which have affected manufacturing in the country, and CEO Elon Musk’s controversial Twitter (TWTR) buyout deal, which relies on Tesla stock, have also contributed to the pressure. 

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