Tesla Inc. shares are caught in the tech selloff as well as some corporate and industry headwinds, but that doesn’t mean investors should shy away from the ‘highly attractive entry point’ that hindsight has created.
That’s from CFRA analyst Garrett Nelson, who said in a note Tuesday that even though Tesla TSLA,
shares “recently went on sale,” the company is “one of the most compelling growth stories in the market — an investment with long-term return potential similar to tech disruptors such as (Apple Inc. AAPL,
) or (Amazon.com Inc. AMZN,
) A few years ago.”
Tesla shares have lost 44% this year, compared to losses of around 21% for the S&P 500 index. SPX,
But it’s still the best-performing automaker stock on Nelson’s screens, with other major automakers down an average of about 52%, the analyst said.
“Tesla has been unfairly punished by the market and the company is not recognized for several key story positives,” Nelson said.
This includes “outstanding” execution of operations and earnings, potential growth in production from its new plants in Austin, Texas, and Berlin, Germany, and “dramatic balance sheet improvement and an impressive pipeline of future products.” “.
Markets may also be underestimating the role record gasoline prices could play in driving electric vehicle sales volume growth, he said. Tesla could also surprise markets by bringing its electric pickup truck, the Cybertruck, and commercial electric truck, the Semi, to market sooner than expected, Nelson said.
Tesla stock is down 33% so far in the second quarter and has lost about 30% since chief executive Elon Musk made his bid on social media company Twitter Inc. TWTR,
Concerns that Twitter would be “too distracting” for Musk and Tesla are “overblown,” Nelson said in his memo. Musk surrounded himself with a “highly competent” management team at Tesla and was able to balance the growth of Tesla and space company SpaceX for several years, in addition to his other companies, the analyst said.
Musk spoke about the state of the US economy and the possibility of a recession. Earlier on Tuesday, the Tesla CEO said a recession “is inevitable at some point.”