Here’s how Citi and Morgan Stanley make Tesla run on the stock market
Shares of Tesla rose nearly 8% on Wednesday after Citigroup raised its rating from 'buy' to 'neutral', citing a more balanced outlook between risks and rewards. Even Morgan Stanley has changed its mind on the shares of Elon Musk's automotive company
Citigroup and Morgan Stanley analysts have turbocharged Tesla shares.
Shares of Tesla rose nearly 8% on Wednesday after hitting a 52-week intraday low the day before and are still trading 3% higher today. The rally followed an update from analysts at Citi and Morgan Stanley. Additionally, an indication from Tesla CEO Elon Musk that South Korea is the best candidate for a new factory the company hopes to build in Asia also sparked sales.
In fact, Citi upgraded the stock's rating from "buy" to "neutral" and wrote in a note that "the year-to-date pullback has balanced short-term risk/reward." And Morgan Stanley says the fire sale has gone too far. The stock has tumbled this year, in part on concern about how much time and money CEO Elon Musk has to spend on Twitter after buying the social media company in October. To finance the Twitter takeover, the world's richest man sold $15.3 billion of his Tesla stock: $8.4 billion in April and $6.9 billion (good) in August . Musk has obtained a 13 billion dollar financing package, one of the largest ever organized on Wall Street, put together by a group of banks led by Morgan Stanley.
THE PERFORMANCE OF THE SHARE
The extended sell-off that preceded Wednesday's rally came as Musk's attention largely turned to Twitter, which he acquired last month for $44 billion.
Some declines in Tesla stock followed massive stock sales by Musk as he liquidates in part to fund the Twitter deal. Earlier this month, Musk sold another $3.95 billion in Tesla stock, telling Twitter employees he was doing it to bail out the social media company.
CITI AND MORGAN STANLEY CHANGE THEIR MIND ABOUT TESLA STOCK
Now the drop in Tesla's stock price has prompted Citigroup and Morgan Stanley to change their minds: they're a decent deal all of a sudden.
After losing nearly $300 billion in market value in two months, a growing chorus of Tesla Inc. analysts say the stock price decline has gone far enough, propelling the stock higher on Wednesday, Bloomberg reports. Shares jumped nearly 8% Wednesday after hitting a 52-week low the day before.
MORGAN STANLEY'S OPINION
Some Tesla analysts and investors are concerned about the potential fallout for the electric car company. Morgan Stanley analyst Adam Jonas wrote in a report Wednesday that the Twitter plight could hurt consumer demand for Tesla, as well as trade deals, government relations and "capital markets support." The company still recommends buying Tesla stock and has a $330 price target. The stock traded at nearly $183 late Wednesday afternoon.
Despite challenges, including slowing demand and price cuts in China, Tesla is the only electric vehicle maker covered by Morgan Stanley that generates a profit on the sale of its cars, Jonas wrote in a statement. The analyst, who also highlighted Tesla's potential to benefit from US consumer tax credits, reiterated his $330 price target.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/ecco-come-citi-e-morgan-stanley-fanno-correre-tesla-in-borsa/ on Fri, 25 Nov 2022 06:57:41 +0000.