Analyst Note| Seth Goldstein, CFA |
On Aug. 16, Tesla applied to become a retail energy provider in Texas. We think the Public Utility Commission of Texas will approve the company's application later this year as Tesla meets the minimum retail energy provider requirements. After reviewing the filing, we think Tesla's plan will be to sell energy to customers who already own a Tesla vehicle. The move is in line with our view that Tesla will average double-digit annual revenue growth and see margin expansion over the next decade. As such, we maintain our $600 fair value estimate. Our narrow moat rating is also unchanged. At current prices, we view the shares as slightly overvalued, trading in 3-star territory but roughly 20% above our fair value estimate.