Why Target’s new CEO won’t have a honeymoon period: Opening Bid top takeaway
Complacent investors have been hit with a reality check on tech stocks this week.
Momentum favorite Palantir (PLTR) getting drilled again today. Nvidia (NVDA) is seeing mixed action.
Queue the tech stock correction chatter!
“Investors worry the tech rally is due for a pullback/correction with the constant valuation arguments front and center,” Wedbush analyst Dan Ives explained. “Adding to the agitation on the Street around the tech trade is a lot of moving parts around tariffs, chips into China, Intel/US Government stake, and what this all means for tech stocks looking ahead.”
Ives added, “We view tech sell-offs like yesterday as opportunities to own the core winners.”
That bullish thesis may be put further to the test in the coming sessions.
The Wall Street Journal reported today that billionaire Elon Musk is pulling back on his desire to create the America Party as he focuses on his many companies.
That sent me snooping for some fresh analyst coverage on Tesla (TSLA).
William Blair analyst Jed Dorsheimer apparently spent last week in Austin, Texas, riding around in Tesla’s new robotaxis. He said the robotaxi offers “a glimpse into the future.” He values the robotaxi business at $298 per share, based on its operating profit potential, and has a price target of $357 on the stock.
Here is how Dorsheimer thinks through the valuation:
“Our robotaxi model through 2040 assumes total rideshare miles of 1.1 trillion per year (one-third of total miles driven in the U.S. per year), with average price per mile reducing from $2.50 to $1.25, estimating a total addressable market (TAM) of $1.4 trillion. Tesla has the ability to leverage its lower cost structure and weaponize pricing — charging 50% less per mile, it can still achieve near 60% EBITDA margins. We expect Tesla to win 35% market share versus competitors Waymo at 15%, Uber (UBER) at 38%, and Lyft (LYFT) at 13%, generating almost $250 billion in revenue in 2040. After discounting the robotaxi EBITDA of $145 billion at 8.5% discount rate, we estimate an implied value of Tesla’s robotaxi business at $298.61 per share, energy business at $30.73 per share, and auto business at $28.09 per share, totaling an implied fair value of $357.43 per share.”
Target (TGT) is tapping homegrown talent as its next CEO at one of the most pivotal moments in its 63-year history.
The discounter announced that longtime CEO Brian Cornell’s heavily groomed No. 2, Michael Fiddelke, will take over as CEO on Feb. 1, 2026. Cornell, who has been CEO of Target since August 2014, will slide into the executive chair position for an undetermined period of time. Fiddelke joined Target in 2003 as an intern and rose through the ranks to CFO and then COO.
“I’ve had this conversation with the board for a number of years, and I’ve been in the role for 11 years. I’m going into my 12th now. I will actually turn 67 early next year, and I think it’s time for me to step back, recharge, spend a lot more time with my family, a lot fewer nights in hotels, and be a great supporter of Michael and the team for the rest of my life,” Cornell told me by video call while sitting next to Fiddelke at the company’s Minneapolis headquarters.
Fiddelke added, “I bleed Target red after 20 years here, and there’s nothing more important to me than working with the incredible team that we have to chart the next chapter for Target. I mean, I’ve seen us in that 20 years at our best. I’ve seen us not at our best. When we’re at our best, we are pretty darn tough to beat.”
“The market had anticipated a CEO change, though we believe was hoping for an external CEO given the troubles Target has had driving sales and profits in recent yrs,” Citi analyst Paul Lejuez said.
But this decision isn’t a surprise. For one, Fiddelke has been Cornell’s right-hand man for several years. It has become quite apparent over the past year that he was grooming Fiddelke to take over while working to get board buy-in. I’ve gotten to know Fiddelke in recent years. Nice fella, and he has earned the opportunity to sit in the CEO seat.
If this were any other time for Target, the decision would probably be celebrated. It’s not often that an intern at a company becomes its CEO. The only comparable story I can think of is Walmart (WMT) CEO Doug McMillon going from truck loader to head honcho.
But Fiddelke will unlikely have a honeymoon period, as he’s been at Target during its past 24 months of struggles, including the weak second quarter.
People I’ve talked to wanted an outsider as Target’s next CEO, with fresh eyes to fix its issues (not unlike when Cornell was hired in 2014 — his career was mostly spent at Walmart and PepsiCo (PEP). Fiddelke will be seen as a continuation of a strategy that hasn’t been working.
I asked Fiddelke on the call how candid he plans to be in the early going on the strategy review. He sounded like he was ready to divert from Cornell’s playbook and shake things up. He’ll have to do just that, and quickly, to win over a likely skeptical Wall Street.
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Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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