Tesla (NASDAQ:TSLA) share are down 8% over the past five days. After TSLA stock rallied through the final two weeks of March and the first week of April, opportunity is knocking for investors. Is now the time to make a move and buy Tesla stock? Or, is this a sign of worse to come?
Several factors are behind this current slump. From a business perspective, there was bad news out of China. Reuters reported that China’s auto market was hit badly by Covid-19 in March. When sales in the world’s largest car market fall by 11.7%, that’s bad news for any auto maker doing business there.
Tesla was also impacted by lockdowns in that country. According to Reuters, with multiple production shutdowns, the company was only able to assemble 55,462 units in March at its Shanghai Gigafactory compared to 68,117 vehicles in January. Production at that plant remains suspended.
In addition, Tesla CEO Elon Musk has been making headlines, and not necessarily in a good way. He is facing Securities and Exchange Commission fines over the large stake he purchased in his favorite social media company.
The Cyber Rodeo Was Good News for TSLA Investors
China will recover from the current Covid-19 wave, and Elon Musk’s latest distraction will fade. The big news potential Tesla investors should be watching was revealed at last week’s Cyber Rodeo at the company’s Austin GigaFactory.
Musk talked about the company releasing a beta version of Tesla’s full self-driving software this year. In addition, he promised Tesla would release a robotic taxi next year. Musk also put a name on the company’s humanoid robot — Optimus. I’m not getting too excited about any of this. Elon Musk has a history of over-promising on futuristic tech.
What I was happy to hear was confirmation that the Tesla Cybertruck will begin production in 2023. Given North America’s appetite for pickup trucks, the company’s battery-powered pickup is going to be a critical release. In addition, it was confirmed this Gigafactory will be churning out Tesla’s new batteries. Musk also claimed that the Tesla Semi and Roadster will be going into production next year. If so, those releases would be the icing on the cake for what is shaping up to be one of the company’s most important years.
TSLA Stock Has Recently Earned Notable Analyst Upgrades
In the lead-up to the Cyber Rodeo and again in the aftermath, TSLA stock received some notable analyst upgrades.
As I wrote last week, Deutsche Bank upped its price target for TSLA to $1,200 based on projections that Tesla was on track to deliver 1.5 million EVs in 2022. After Tesla wrapped up its Cyber Rodeo event, Wedbush analyst Dan Ives raised his price target for TSLA stock to $1,400. Ives feels that the Austin Gigafactory — the world’s largest factory complex based on volume — signals a new beginning for the company.
Both of these analysts were already bullish about Tesla stock. The upgraded price targets (representing 20% and 40% upside, respectively) show that they are expecting the company’s latest moves to have a big impact. If you’re considering adding TSLA stock to your portfolio, there’s the bull case for you.
Should You Buy TSLA Stock?
Tesla is one of those companies that elicits very strong feelings. Part of that is undoubtedly a reflection of peoples’ views of CEO Elon Musk. Some people also continue to have mixed feeling about the EV industry as a whole. Will it really take off and go mainstream, or is this another false start? Even if it does, will Tesla maintain its leadership position once the lumbering auto giants have recalibrated?
Those questions and concerns are reflected in analyst outlooks on Tesla.
Obviously, Deutsche Bank and Wedbush Securities are bullish on TSLA stock. That’s a majority view in the industry, but there are exceptions and they can be extreme. For example, among the investment analysts polled by the Wall Street Journal, TSLA earns a consensus “overweight” rating. However, among the 41 analysts being tracked, six have TSLA rated as a “sell.” And while the average price target among the WSJ analysts is $982.93, one has a $67 price target for TSLA stock.
As for Portfolio Grader, plug in the data for Tesla and it comes out with a very impressive “A” rating. The case for adding TSLA stock to your growth portfolio becomes even more compelling with its current weakness. The Cyber Rodeo showed that Tesla investors have a lot to look forward to, in addition to the company’s current strong performance.
— Louis Navellier and the InvestorPlace Research Staff
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Source: Investor Place