Barclays downgrades Tesla, investors take profits after stock’s rally
Barclays said on Wednesday that after Tesla’s recent gains, now is the time to take profits. Analyst Dan Levy downgraded the electric car maker’s stock to “equal weight” from “overweight,” but raised his price target by $40 to $260. Still, Levy’s new target implies the stock would need to fall 5.3% from Tuesday’s close. Tesla saw some downward pressure after its first-quarter earnings report in April, but the company’s shares have soared 80% from their lows for the month. In comparison, the S&P 500 has gained about 8% over the same period. “We believe the stock’s recent gains can best be explained by the market’s current trading in the artificial intelligence-driven theme, as well as the excitement surrounding the recent announcement of opening TSLA’s supercharger network to other brands,” he said in a note to clients on Wednesday. “While we’re not surprised the stock is participating in the rally, we think it’s prudent to wait and see.” The stock has risen more than 120% so far this year, compared with the S&P 500 and tech-heavy stocks. The main Nasdaq Composite rose more than 14% and 30%, respectively. That marks a turning point for the stock after underperforming in 2022, down 65% for the year. TSLA .SPX, .IXIC YTD Mountain Tesla vs. S&P 500 and Nasdaq Composite Levy said there is still a clear long-term opportunity for shareholders and that Tesla remains on track amid its transition to electrification. Be a winner among OEMs. He noted that the lower-cost Model 2 could generate excitement in late 2024 and 2025. But for now, he said, fundamentals may be being overlooked as investors buy into AI-related stocks amid a surge in interest in AI technology. While Levy noted that the company does have an AI business, particularly through self-driving technology, it’s unlikely to be a big winner like Nvidia. Additionally, Levy said part of the rally could be due to Tesla’s “lack of bad news,” noting that a May article in a German newspaper describing problems with the company’s data security and self-driving efforts was quickly forgotten. up. He also said the overall sentiment toward Tesla since the article was published has been relatively positive. News such as changes to the Standard Range Model 3’s eligibility for the full Inflation Cutting Act tax credit and the hiring of NBCUniversal advertising executive Linda Yaccarino as Twitter’s CEO may also help. Partnerships to allow other automakers to use Tesla’s charging technology have also been a recent topic of conversation when considering the direction of Tesla’s stock, he said. “Our experience with Tesla has made it clear to us that Tesla stock is driven by more than just fundamentals,” Levy said. “In fact, we sometimes like to be more generous with our target P/E ratio because We believe Tesla has a better chance of getting the market ‘not just an automaker’ treatment with support from different parts of the investment community, including retail and momentum investors.” Disclaimer: NBCUniversal is the parent company of CNBC. — CNBC’s Michael Bloom contributed to this report.
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