Tesla stock bulls and bears react to Elon Musk's $700 billion crash. Here's what Morgan Stanley, Citi and others say could happen next

Elon Musk

Tesla CEO Elon Musk.Alex Kantrowitz

  • Analysts aren’t souring on Tesla despite a market rout that erased nearly $700 billion in value from its peak a year ago.

  • In fact, even a noted Tesla bear upgraded the stock, saying it has likely bottomed.

  • “We believe the year-to-date pullback has balanced out the near-term risk/reward,” Citi analyst Itay Michaeli said.

Tesla stock’s nosedive has wiped out nearly $700 billion in market value from a year-ago peak, and Wall Street is starting to say enough is enough.

In fact, even a noted Tesla bear has upgraded the stock to “neutral” from “sell,” saying it has likely bottomed.

“We believe the year-to-date pullback has balanced out the near-term risk/reward,” Citi analyst Itay Michaeli said in a note Wednesday.

Here are the latest comments surrounding Elon Musk’s Tesla from firms like Citigroup, Morgan Stanley and Wedbush.

Itay Michaeli, analyst at Citigroup

In addition to upgrading Tesla stock, Michaeli raised his price target to $176 from $141.33, though the new one is still below where shares last traded as they jumped 8% to top $183 on Wednesday.

“To be sure, macro/competitive concerns are likely to remain an overhang with capacity rising, but as we’ve previously written, in a hard landing scenario Tesla’s long-term competitive position likely also improves and potentially further enhanced by [President Joe Biden’s inflation reduction act].”

Adam Jonas, analyst at Morgan Stanley 

Meanwhile, Tesla bull Jonas said in a note Wednesday that shares were nearing his “bear case” price target of $150, indicating a potential buying opportunity at a deep discount.

He has an “overweight” rating on Tesla stock with a $330 price target. While the acquisition of Twitter remains a distraction for Musk and represents a potential risk to Tesla investors, Jonas said the company should grow sales by 37% next year, produce $15 billion in free cash flow, and reinforce its status as the world’s top electric vehicle maker.

“We believe Tesla’s ‘gap-to-competition’ can potentially widen, particularly as EV prices pivot from inflationary to deflationary,” he wrote. “With respect to the (inflation reduction act) we believe Tesla is by far the best positioned OEM in terms of potential eligibility for consumer tax and production credits.”

Cathie Wood, Ark Investment CEO

Wood has been a Tesla super bull and set a price target of $4,600 earlier this year, before its stock split. In an interview with Bloomberg TV on Tuesday, she reiterated her optimism.

“Many people say, ‘aren’t you worried about Tesla?’ No we’re not because of our work on electric vehicles. They are grabbing at a disproportionate share and will continue to do so of a market that we think, by 2027, will account for 85% to 95% of all cars sold in the world. That’s on automatic pilot. He’s [Elon Musk] now working on autonomous which we think is going to work.”

“We think Tesla is going to do it [autonomous] in a much bigger way.”

Dan Ives, analyst at Wedbush

Then there’s Ives, who was a long-time bull but has turned less bullish recently by removing Tesla from Wedbush’s “best ideas” list earlier this month due to the Twitter takeover.

In a new note, he expanded on the “Twitter overhang” as a risk factor to Tesla stock:

“The problem is while the PR Twilight Zone of Twitter happens for the world to see and advertisers remain at bay while the Musk wild card of content moderation is front and center, the perceived overhang of ‘key person risk’ with Musk is a real overhang on Tesla’s stock and not abating,”

Ives also listed three top risk factors to both the stock and shareholders:

1. “Fear of Musk selling more stock to fund Twitter’s red ink.”

2. “Brand deterioration of Musk associated with Tesla.”

3. “Attention of Musk for now all focused on Twitter instead of Tesla.”

Read the original article on Business Insider