Topline
Tesla stock bounced back Monday, gaining almost 5% by midday trading, as bullish Wall Street commentary helped patch investment sentiment for Elon Musk’s electric vehicle maker following last week’s brutal post-earnings selloff.
Tesla CEO Elon Musk claps at Israeli Prime Minister Benjamin Netanyahu’s address to U.S. Congress … [+]
Key Facts
Tesla stock rose about $10 per share to $230, on pace for its best percentage gain since July 3 and posting the sixth-largest gain of any S&P 500 stock Monday, according to FactSet data.
Inching back toward the $246 share price it had before its quarterly earnings last week caused the stock’s worst day since 2020, Tesla stock got a boost from several positive analyst notes.
Morgan Stanley automotives analyst Adam Jonas dubbed Tesla his top car stock pick in a Monday note to clients, citing optimism about Tesla stopping the bleeding in profits due to cost cutting, musing on the potential of Tesla as the “epicenter” of the artificial intelligence robot market and maintaining a Wall Street-leading $310 price target for Tesla (35% implied further upside).
Stifel analyst Stephen Gengaro similarly declared Monday he expects Tesla’s dwindling profit margins “to stabilize,” driving his buy rating for the stock along with the prospect for Tesla’s full self-driving program to be a “significant driver to TSLA’s long-term growth and differentiation.”
Piper Sandler analyst Alexander Potter was more blunt in his optimism about self-driving bolstering Tesla’s valuation, opening his brief note to clients Monday: “Tesla may have solved the self-driving puzzle, don’t roll your eyes, buy TSLA.”
Key Background
Tesla stock dove 12% last Wednesday after the company reported its fourth-consecutive quarter of negative year-over-year earnings growth, falling a massive 43% from 2023’s second quarter to 2024’s. After declining 23% from 2022 to 2023, Tesla’s profits are expected to decline a further 27% from 2023 to 2024, according to consensus analyst estimates compiled by FactSet, a truly unusual extended slump for a company whose stock is considered high-growth by investors. Tesla’s polarizing CEO Musk has characterized this as a blip for a company between “two growth waves,” and optimistic observers can point to the almost limitless potential for Tesla should it crack the code on its non-traditional projects like autonomous driving or its Optimus humanoid robots. Ford, which Tesla replaced as Morgan Stanley’s top pick, also had a dismal week on the stock market last week, falling 18% after its quarterly results.
Chief Critic
Whether it’s declining earnings, Musk’s outspoken stances on political and social issues or safety concerns regarding its semi-autonomous vehicles already on the road, there’s plenty of ammunition to use against Tesla. Perhaps Tesla’s most prominent skeptic on Wall Street is Bernstein analyst Toni Sacconaghi, whose price target of $120 implies a fair valuation of about half of Tesla’s $720 billion market capitalization Monday. Autonomous driving “may not be a winner-take-all market, and if it is, it is not clear that Tesla will win,” remarked Sacconaghi, adding that “growth stocks only work when they grow.”