Investor's Corner

Tesla rallies 8%, completes its best day in 2019 as Wall St. sentiments improve

It appears that a turnaround and a recovery are indeed realistic prospects for electric car maker Tesla (NASDAQ:TSLA). After meeting a perfect storm of lower-than-expected Q1 numbers, negative analyst sentiments, and concerns about the demand for its vehicles that drove its stock down nearly 3-year lows, Tesla ended Tuesday in a commanding fashion, up 8% and trading at $193.60.

Tuesday’s rally allowed Tesla to recover over $2 billion of its market cap, which has been decreasing at an accelerated pace since the company released its first-quarter production and delivery reports. It should be noted that despite its massive 8% rally on Tuesday, Tesla stock has still fallen almost 42% in 2019, placing it as the worst performer in the Nasdaq 100. Nevertheless, the company’s surprise rally on Tuesday does suggest that it might be far too early to dismiss Tesla just yet.

Inasmuch as the steep drop of Tesla stock over the past months was partly fueled by reservations from Wall St. analysts, it was also analysts who appear to have helped boost the company on Tuesday. During an appearance at CNBC’s Fast Money, Cornerstone Macro technical analyst Carter Worth noted that TSLA stock had fallen so much, it is now a good buy. “Tesla has undershot by such an amount that actually it’s so bad, it’s good,” he said.

Even Morgan Stanley analyst Adam Jonas, who made headlines recently after he posted a $10 per share worst-case scenario for Tesla, reiterated his equal-weight rating and $230 price target for the company on Tuesday. Striking a notably more optimistic tone this time around, the Morgan Stanley analyst mentioned that the company’s stock has value, thanks to its full self-driving technologies. “Tesla has significant strategic value that we believe can potentially be crystallized in ways that may challenge traditional [valuation] techniques,” Jonas noted.

Quite notably, Tesla’s unique advantage in the electric vehicle market was emphasized strongly by TSLA bull Gene Munster of Loup Ventures last month, at a time when the company’s shares were being beaten down. In a taped interview that was only released today, Munster explained that in the electric car market, Tesla is simply in a league of its own.

“One is the battery performance, and this is critical because range anxiety is something that prevents people from buying electric cars. The second is the manufacturing process, which has been held up as a pain point for Tesla, and undoubtedly, it has been painful. But everything they’re doing is shifting the manufacturing from a traditional car to really a computer on wheels,” he said.

The winds might finally be shifting for the Silicon Valley-based electric car maker.

Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.

Tesla rallies 8%, completes its best day in 2019 as Wall St. sentiments improve
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