By
Svetlana Soroka
April 18th, 2024
TSLA stock price corrected as markets remained under pressure on Monday. However, Bofa Securities analyst still remains bullish on TSLA stock saying that it can enter an upward spiral anytime soon.
On Monday, January 11, the automobile giant Tesla Inc (NASDAQ: TSLA) registered its first negative trading session for the year 2021. TSLA stock price tanked nearly 8% closing its trading session at $811. Monday’s correction ultimately put breaks on the continuous Tesla stock rally since December 25, 2020.
Before Monday, TSLA stock registered 11 straight consecutive sessions of the surge. However, despite Monday’s correction, TSLA stock is nearly 30% up since Christmas. Tesla has enjoyed an incredible bull run over the last year to become the world’s largest automobile company with a market cap of $768 billion.
Monday’s dip in Tesla (TSLA) stock comes as part of the broader market correction. Markets remained under pressure as all of the top-three indices ended in the red.
Tesla’s recent rally in the market came on the backdrop of a strong Q4 2020 sales number. For the last calendar year, Tesla managed to clock 500,000 vehicle deliveries while expanding its production capabilities. Last year, the company delivered back-to-back quarters of profitability and managed to secure a place in the S&P 500.
Analyst Predicts an Upward Spiral for Tesla (TSLA) Stock after Correction
Analyst John Murphy from Bofa Securities says that Tesla’s access to low-cost capital helps it attain accelerated growth. Thus, the analyst notes that this can lead to an “upward spiral for the Tesla stock”. In a note to investors, Murphy wrote:
“It is important to recognize that the higher the upward spiral of TSLA’s stock goes, the cheaper capital becomes to fund growth, which is then rewarded by investors with a higher stock price”.
The analyst further added that Tesla uses “its stock to raise capital through low-cost equity offerings in order to accelerate aggressive capacity buildout plans globally and drive units/revenue substantially higher, further cementing its status as the dominant EV automaker”. In a concluding statement, the analyst writes:
“TSLA’s hyper-growth is not necessarily self-funding, and really does not need to be when low cost capital is plentiful. Simply put, TSLA is a new disruptive (auto) company that may or may not be dominant in the long-term, but that does not matter as long as it can keep funding outsized growth with almost no cost capital driving capacity expansion.”
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