Tesla shares have shed more than $700 billion in market value since peaking in early November of last year, but analysts now suggest the carmaker is poised for a comeback.
Tesla (TSLA) – Get Free Report shares moved higher Wednesday after analysts at Citigroup lifted their rating on the clean-energy carmaker while Morgan Stanley noted that the stock’s $500 billion slump maybe coming to an end.
Citigroup analyst Itay Michaeli lifted his rating on Tesla to ‘neutral’ from ‘sell’, while boosting his price target by around $35 to $176 per share, arguing the stock’s year-to-date decline of around 58% has “balanced out the near-term risk/reward” for Tesla investors.
“To be sure, macro/competitive concerns are likely to remain an overhang with capacity rising, but as we’ve previously written, in a hard landing scenario Tesla’s long-term competitive position likely also improves and potentially further enhanced by (President Joe Biden’s inflation reduction act),” Michaeli wrote.
Morgan Stanley analyst Adam Jonas, meanwhile, said Tesla shares are “approaching our $150 bear case, driven by price cuts in China, decelerating EV demand and other market currents.”
Jonas, who carries an ‘overweight’ rating with a $330 price target on Tesla stock, said that while the ongoing distraction of CEO Elon Musk’s foray into Twitter will likely expose investors to added risks, the group remains on pace to grow sales by around 37% next year, generate $15 billion in free-cash-flow and consolidate its position as the word’s dominant EV player.
“We believe Tesla’s ‘gap-to-competition’ can potentially widen, particularly as EV prices pivot from inflationary to deflationary,” Jonas wrote. “With respect to the (inflation reduction act) we believe Tesla is by far the best positioned OEM in terms of potential eligibility for consumer tax and production credits.”
Tesla shares were marked 1.9% higher in pre-market trading to indicate an opening bell price of $173.18 each, a move that would still leave the stock down more than 54% since Musk made his intentions to buy Twitter public in early April.
Earlier this month, longtime Tesla bull Dan Ives of Wedbush removed the electric carmaker from his ‘best ideas’ list citing what he called the “albatross” of Elon Musk’s $44 billion Twitter takeover.
Ives said Tesla investors face “a very nervous few months” awaiting Tesla’s fourth quarter delivery figures as Musk focuses his attention on Twitter and it myriad issues, and lowered his price target on the stock by $50, to $250 per share, while maintaining his ‘outperform rating’ in a scathing note that included pointed attacks on Musk’s recent social media ambitions.
“In what has been a dark comedy show with Twitter, Musk has essentially tarnished the Tesla story/stock and is starting to potentially impact the Tesla brand with this ongoing Twitter train wreck disaster,” Ives wrote.
Musk, who is financing part of the $44 billion required to buy the social media website through his personal stock holdings, sold 19.5 million Tesla shares between November 4 and November 7, at prices ranging between $197.196 and $208.731 per share, across a total of twelve transactions that raised $3.95 billion.
Earlier this summer, Musk sold 7.92 million shares between August 5 and August 9, netting a total of around $6.9 billion, taking advantage of a 47% rally in Tesla shares from late May to August 5, when the first sale was made. He sold another $8.5 billion in April.
Musk told Tesla investors last month that he and his investor group were “obviously overpaying” for the social media group, with overall costs pegged at $46.5 billion.
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