Tesla Rebounds as Morgan Stanley Says Selloff Gone Too Far

(Bloomberg) – After losing nearly $300 billion in market value in two months, a growing chorus of Tesla Inc. analysts say the stock price decline has gone far enough, pushing the stock to the bottom. increase on Wednesday.

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Morgan Stanley analyst Adam Jonas said earlier that Tesla was approaching its “bear case” price target of $150, providing investors with an opportunity to buy at a bargain price. Citi analysts took the stock from neutral to short, saying a drop of more than 50% this year “balanced the short-term risk/reward.”

Despite challenges such as decelerating demand and price cuts in China, Tesla is the only electric vehicle maker covered by Morgan Stanley that is generating a profit on the sale of its cars, Jonas wrote in a note. The analyst – who also pointed to Tesla’s potential to benefit from consumer tax credits in the United States – reiterated his price target of $330.

Shares closed up 7.8% at $183.20 in New York. The stock has fallen this year due to rising raw material costs, production and sales issues in China and pressure on customer budgets. Lately, CEO Elon Musk’s focus on turning around Twitter Inc. has also hurt sentiment, with $300 billion wiped off Tesla’s market capitalization in the past two months, according to Bloomberg calculations.

The distraction caused by Twitter needs to stop to stop the stock slide, Jonas says. “There must be some form of ‘circuit breaker’ sentiment around the Twitter situation to calm investor concerns around Tesla,” he wrote.

Despite all the challenges Tesla has faced this year, Wall Street has remained mostly bullish. The majority of Tesla analysts tracked by Bloomberg rate the stock as a buy or equivalent, while shares are expected to rally a whopping 57% to reach the analysts’ average target price. This year’s crisis has left stocks trading at 31 times forward earnings, down from more than 200 times at the start of 2021.

Citi analyst Itay Michaeli, who updated the headline on Wednesday, has one of the lowest price targets on the street at $176. The analyst said he was turning more positive because Tesla’s fall means some of the stock’s overly bullish expectations, including on unit sales, have now been assessed.

–With help from James Cone, Esha Dey and Boris Korby.

(Updates stock movement in fourth paragraph. A previous version of this story corrected Citi’s note in second paragraph.)

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