As it turns out, all Tesla stock (NASDAQ:TSLA) needed was an Elon Musk-caused Twitter overhang for the company’s bulls and bears to agree. After shedding over $700 billion in market value since hitting all-time highs in early November last year, both bullish and bearish analysts recently suggested that the electric vehicle maker is poised for a potential comeback.
Citigroup analyst Itay Michaeli posted what could only be described as a surprise on Wednesday after he upgraded Tesla to a “Neutral” rating. Michaeli has long been a Tesla bear, giving the electric vehicle maker a “Sell” rating since 2019. Even amidst Tesla’s massive rise from 2020 to 2021, the Citigroup analyst was among those who maintained a “Sell” rating on the stock.
Yet in a note on Wednesday, Michaeli boosted his Tesla price target to $176 per share. He also argued that the electric vehicle maker’s year-to-date decline of nearly 60% has effectively “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),” the Citigroup analyst wrote.
Tesla bull Adam Jonas of Morgan Stanley seems to be on the same page. Jonas carries an “Overweight” rating and an optimistic $330 price target on TSLA, though he noted that the company is exposed to a number of risks. These include CEO Elon Musk’s distractions from his acquisition of Twitter, as well as challenges in countries like China.
Despite this, Jonas noted that Tesla seems to be on pace to grow its sales by about 37% next year while generating about $15 billion in free cash flow. Overall, the Tesla bull noted that the Texas-based electric vehicle maker is still well positioned in the EV market, especially as the United States adopts the rules of President Joe Biden’s Inflation Reduction Act.
“We believe Tesla’s ‘gap-to-competition’ can potentially widen, particularly as EV prices pivot from inflationary to deflationary. 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,” Jonas wrote.
So far, Tesla stock appears to have calmed down somewhat, with TSLA shares ending on the green on Tuesday. TSLA stock is also up 2.76% on Wednesday’s pre-market.
Disclaimer: I am long Tesla.
Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.
