Tesla’s three-for-one stock split that began after the close of trading on Wednesday is just one of several catalysts driving the stock, Wall Street analysts say.
“After violent shutdowns in April/May due to the zero Covid policy, we are now seeing unprecedented Model Y production in China following factory upgrades with Musk & Co. with a production rate of over 1 million vehicles per annum from this key product artery. ” Wedbush analyst Dan Ives said in a note to clients on Thursday.
“Demand is not the problem for Tesla, but supply has been and is now clearly on an upward trajectory with China at the next level of Model Y production, while Berlin and Austin ramp up production lines at the end of the year,” he added. Ives. “While the volatile macro will clearly reduce some demand for Tesla (as well as the industry), we believe that demand continues to remain solid for the stable electric electric system in the US, Europe and China.”
The longtime Tesla bull reiterated an outperform rating on Tesla shares and raised his price target to $360 from $333, as adjusted for the stock split.
Tesla stock was down slightly to $293 at 2:27 p.m. ET on Thursday and was among the hottest prices on the Yahoo Finance platform.
Another thing the Street is assessing is how an upward maneuver from lawmakers would affect Tesla.
The Inflation Act’s new $7,500 tax credit for electric vehicles could be a significant headwind for Tesla stock and the company’s bottom line, CFRA analyst Garrett Nelson noted in a note of his own.
“The signing of the Inflation Reduction Act was the equivalent of ‘Christmas in August’ for Elon Musk & Co., as we believe Tesla is the biggest winner from the new law, as most versions of the two electric vehicles with the top sellers (Tesla’s Model Y and Model 3) become eligible for the $7,500 federal EV tax credit effective January 1, 2023,” Nelson wrote. “Previously, all Tesla vehicles were phased out of tax credit eligibility once they exceeded 200,000 units per manufacturer.”
Nelson — who also reiterated an outperform rating on the stock with an adjusted price target of $415 — also believes the aforementioned stock split will serve as an upside catalyst for Tesla.
“In our view, a stock split doesn’t change anything materially — the impact is more psychological, as companies with improved prospects and rising stock prices tend to do stock splits,” Nelson explained. “It’s worth mentioning that studies have shown that stocks that break up tend to outperform the broader market in the 1-3 years after the split. A lower share price could also attract retail investors.”
Brian Sozzi is editor-in-chief and Anchor on Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and up LinkedIn.
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