Topline
Tesla’s stock jumped on Thursday after yet another analyst upgraded the stock to a buy rating, with many experts on Wall Street remaining optimistic that Elon Musk’s electric-vehicle maker still has massive upside and long-term growth potential despite a selloff.
Key Facts
Shares of Tesla have fallen more than 30% so far this year, as growth stocks struggle to win investors who are worried about rising interest rates and surging inflation leading to a recession.
More than half of Wall Street analysts covering the stock remain bullish about the company’s long-term growth prospects, however, arguing that Tesla will continue to be the dominant player in the fast-growing electric vehicle market.
It is “time to be bold” as the recent pullback in the stock offers an “attractive entry point” for investors, with Tesla trading near historic lows on a price-to-earnings basis, UBS analyst Patrick Hummel said in a recent note.
Shares of Tesla jumped nearly 3% on Thursday after UBS upgraded the stock to a “buy” rating with an $1,100-per-share price target, which would imply upside of more than 50% from current levels.
Garrett Nelson, vice president and senior equity analyst at CFRA Research, reiterated Tesla as a “strong buy” last week, giving it a price target of $1,200 per share on the company’s “long-term growth potential.”
Also boosting Tesla’s stock higher on Thursday was news that the company’s factory in Shanghai produced over 33,000 cars in May, a 212% increase from the previous month, when the factory was closed due to strict Covid-19 lockdowns in the city.
Crucial Quote:
“We believe the operational outlook is stronger than ever before,” Hummel said. “We expect Tesla’s vertical integration in semiconductors, software and battery to result in superior absolute growth and profitability in the years ahead.” Tesla’s operational momentum is another cause for optimism, he says, pointing to high order backlogs and two new gigafactories in Germany and Texas that have helped ramp up production further. “The market still underestimates how much better Tesla will fare versus competitors in terms of growth & profitability.”
What To Watch For:
Tesla stock fell 9% last Friday after Reuters reported that CEO Elon Musk had sent an email to executives saying he has a “super bad feeling” about the economy and was looking to cut roughly 10% of jobs at the company. Despite the negative news, the stock has rebounded over 7% this week as Wall Street analysts remain undeterred. Even if Musk does slash some of Tesla’s workforce, UBS says it “doesn’t change” the long-term growth outlook, while analysts at Goldman Sachs called the news “incrementally negative.” Analysts at CFRA, meanwhile, say Musk simply “wants to get ahead of the curve in terms of a slowdown across the highly cyclical auto industry.”
Big Number: $228.5 Billion
That’s how much Elon Musk is worth, according to Forbes’ calculations. The richest person in the world, his net worth rose over $6 billion on Thursday as shares of his electric-vehicle maker moved higher.
