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Tesla (TSLA) caught an upgrade Monday morning that sent its stock up over 5%. Even though some analysts see opportunity in the stock, many questions remain about how the COVID-19 crisis will affect electric-vehicle demand.
Tesla Inc (NASDAQ: TSLA) jumped on Monday more than 5% at the opening after Jefferies raised its grade to buy. One of the reasons for upgrade was definitely the fact that Tesla is a clear leader in the electric-vehicle sector. Jefferies analyst Philippe Houchois explained this Tesla upgrade with the fact that even though we find ourselves in times when gas prices are ridiculously low, there is “continued public policy commitment to supporting [electric-vehicle] sales” in Europe and China.
He also went on to add that Tesla’s balance sheet should remain in “solid shape” in spite of the possible turmoils to the company’s inventories and receivables at the end of the first quarter due to the COVID-19 outbreak.
He said that “looking further out, we see the ability of Tesla (TSLA) to attract capital as a strong positive as pressure on the industry’s transformation accelerates,” lowering his price target to $650 from $800 in conjunction with the upgrade.
Tesla Could Fare Better Than Luxury Competition
On the other hand, Baird analyst Ben Kallo wasn’t that optimistic as Houchois, saying he expects approximately 22% sales growth in 2020. However, he claims there are some important questions about the ways demand being developed beyond 2020.
“We use the 2008-2009 recession as a framework to evaluate potential risks to Tesla vehicle demand. We do think Tesla could fare better than luxury peers, with new products and geographies driving growth.”
He also noted that luxury-vehicle sales in the U.S. plunged from about 474,000 to roughly 350,000 during the financial crisis and that there was five years needed for industry sales to recover.
However, we shouldn’t forget that the Q1 numbers were solid as well. According to data, Tesla delivered more than 88,000 vehicles in the first quarter of the year, which represents 40% higher result than it was the case a year earlier.
Bill Baruch, president of Blue Line Capital commented that Tesla (TSLA) stock acts as a “great trading vehicle.”
Speaking at CNBC’s ‘Trading Nation’ Baruch said:
“Tesla has a very well-defined floor at $400. This is where the 200-day moving average is. It also aligns with what was a previous ceiling. Until that breaks, you want to be buyer into $400, because at any point I feel that you could see a … gain up towards $600.”
At 11:11 am ET, Tesla shares were trading 5.35% higher selling for $506.15. If the stock manages to reach $600, it will mean that there is a 18% rise for the stock. The market cap is 93.08 billion.
Tesla (TSLA) Stock Volatility Meets Versatility
“There are some strong resistance levels up near $600, you have the [38.2%] retracement, the 50-day moving average, as well as the 50% retracement. So, I guess I would not press it out above there if you were to catch a nice swing in that manner.”
Gina Sanchez, CEO of Chantico Global, said that when it comes to Tesla (TSLA) stocks “volatility meets versatility.”
“This stock is so overpriced but [CEO Elon Musk] has certainly shown his ability to get the job done, and to continue to produce. It has been a volatile stock, and that volatility continues because of the pessimism-optimism swing.”
The fact is – Tesla has been acting really extreme. During the last year, the stock was trading cheap as $177 and high as a record $969.