Tesla Inc CEO Elon Musk attends the World Artificial Intelligence Conference (WAIC) in Shanghai, China August 29, 2019.
Song Aly | Reuters
Tesla shares were up nearly 8% on Wednesday after hitting a 52-week low a day earlier. The rally follows an analyst upgrade at Citi and a cue from the Tesla CEO Elon Musk that South Korea is a top candidate for a new factory the company hopes to build in Asia.
The rally is a respite for Tesla investors, who have seen the value of their shares fall by about half this year amid a broader market plunge and divergence. out of risky assets.
“We believe the year-to-date decline has balanced risk/reward in the short term,” Citi analysts wrote. Advanced their rating of the stock to neutral. “To be bullish from here, we’d like to have more confidence in auto average selling price/gross margin demand (including tracking of short-term data points in China and Europe) and progress of the FSD.”
FSD refers to what the company calls its full self-driving capabilities. Tesla sells driver-assistance systems, including standard Autopilot, installed in all of its new vehicles, and an optional high-end FSD. In the US, Tesla’s FSD currently costs $12,000 upfront or $199 per month on a subscription basis. The company did not say what percentage of users chose that option or how many ended their subscriptions.
Musk has promised Tesla investors and customers since 2016 that his company will be able to turn his cars into self-driving vehicles capable of operating like a robotic axle. However, it has not yet been delivered. Drivers using Tesla’s Autopilot, Enhanced Autopilot, FSD, and FSD Beta systems are said to keep an eye on the road, with their hands on the wheel, ready to take on driving duties at all times.
In addition to Citi’s note, Musk spoke on Wednesday with South Korean President Yoon Suk-yeol and expressed optimism that a new Tesla factory will eventually open in the Asian country.
The prolonged sell-off ahead of Wednesday’s rally came as Musk’s attention largely turned to Twitter, the company he bought last month for $44 billion.
Some Tesla shares fell after Musk’s massive stock sale as he partially liquidated to fund the Twitter deal. Earlier this month, Musk sold an additional 3.95 billion USD in Tesla stock, told Twitter employees he was doing it to save the social media company.
Musk quickly implemented mass layoffs, fired executives, and tweaked key features of the platform. In response, many advertisers halted spending on Twitter campaigns indefinitely and civil rights activist has called for a further boycott until Musk’s team proves it can manage hate speech and other harmful content on Twitter.
Some Tesla analysts and investors worry about the potential spillover to the electric car company. Adam Jonas, an analyst at Morgan Stanley, wrote in a report on Wednesday that the Twitter situation could affect consumer demand for Tesla as well as commercial transactions, government relations. and “capital market support”. The company still recommends buying Tesla stock and has a $330 price target.
Shares traded at close to $183 late Wednesday afternoon.
Leo Koguan, one of the members of the company largest individual shareholderand other investors have asked Tesla to buy back large amounts of stock. In a petition shared on Change.org, Tesla bulls and influencer Alexandra Merz said a quick stock buyback will allow Tesla to “benefit from the price shares are currently very low” and “act before the 1% tax on share buybacks applies January 1, 2023.”
Musk has said he’s open to acquiring Tesla, pending board approval. Last month, during the company’s third-quarter earnings call, Musk said Tesla would likely make a “meaningful acquisition” next year, potentially between $5 billion and $10 billion.
CLOCK: Tesla gets upgraded by Citi
