Despite Tesla’s stock tumbling throughout last year, some Wall Street analysts are seeing the low share prices as an opportunity. On the heels of a rough year for Tesla’s stock, one firm has changed its tune on the automaker’s potential, noting that the current buy-in price may be reasonably low.
Above: Tesla's logo on a Model 3. (Image: Eyosias G / Unsplash)
Tesla was upgraded from a Hold to a Buy rating by Edward Jones analyst Jeff Windau earlier this month, as reported by CNBC. The news comes as Tesla’s stock has fallen significantly in recent months, making the company’s share prices look appealing to previously skeptical analysts like Windau.
In a note to clients, Windau described Tesla’s stock as looking affordable given the potential for the company’s long-term growth. He also said he expects Tesla’s Full Self-Driving (FSD) beta to continue improving, along with the automaker’s EV batteries. Additionally, Windau pointed out Tesla’s plans to launch new products this year, including the upcoming Cybertruck.
“While slowing economic growth could pressure near-term auto sales, we believe the electric vehicle (EV) market will continue to expand due to global regulations,” Windau wrote in a note to clients. “We believe Tesla’s new product launches will allow it to take advantage of this expanding market. In our opinion, the share price of Tesla does not reflect its long-term growth opportunities.”
Tesla’s stock fell by 65 percent in 2022, exacerbated by rising interest rates, CEO Elon Musk’s sale of shares and concerns over cooling demand. Despite this, the EV sector is expected to continue growing over the next several years, and some think that Tesla is well-positioned to handle incoming competition from other automakers. Musk has also said he won’t be selling more Tesla shares for another 18-24 months.
The Tesla Model Y, the automaker’s flagship SUV, beat out the Honda CR-V last year to enter the top 10 best-selling cars in the U.S. The category includes both gas cars and EVs, marking a significant milestone for the company’s increasingly mainstream appeal.
The automaker also opened two factories last year, one in Grünheide, Germany and one in Austin, Texas. The plants are expected to continue ramping up Model Y production and they each reached milestones of a 3,000-unit weekly output in the past few months.
Like with any stock, it’s impossible to say with any certainty what Tesla’s stock will do in the coming years. However, Windau’s bear-turned-bull mentality balances Tesla’s long-term potential with its recent stock woes, resulting in a low buy-in price that could be a major opportunity for investors.