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Tesla shares are now down 72% YTD: buy the dip or sell the rip?

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on Dec 28, 2022
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  • Garrett Nelson is sticking to his "buy" rating on the Tesla stock.
  • The CFRA analyst says several positive catalysts are not priced in.
  • Tesla shares are now down roughly 72% versus the start of 2022.

Tesla Inc (NASDAQ: TSLA) has lost over $700 billion in market cap this year but a CFRA Research analyst is sticking to his “buy” rating on the electric vehicles manufacturer.

EV stocks at large have been selling off

Garrett Nelson finds it unfair to single out Tesla Inc since rivals, including Rivian and Lucid are down way more for the year. That suggests the sell-off is not company specific per se.

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Part of the recent weakness in its stock price, the analyst added, was also related to tax selling.

Tesla lost over 11% yesterday on planning to take little additional downtime at Shanghai factory. We think that kind of sell-off on that news is really overdone. China factory is only one of four factories they’re currently operating.

Last week, Elon Musk attributed the unprecedented sell-off in Tesla shares to the Fed being overaggressive in its fight against inflation and not to his Twitter endeavour (read more).

Tesla shares could double from here

Amidst several headwinds, as per Garrett Nelson, there are a list of positive catalysts as well that are not reflected in the current stock price. Speaking this morning with CNBC’s Melissa Lee, he said:

We think they could announce a buyback. They’ve alluded to it in the last few months. It’ll likely be in the magnitude of $5.0 billion to $10 billion. Tesla’s balance sheet was recently upgraded to investment grade by S&P.

The CFRA analyst is convinced that the EV company will also begin to benefit from the “Inflation Reduction Act” from next week.

His $225 price target suggests that Tesla shares could double from here.