Citigroup (C) upgraded Tesla ( TSLA ) shares on Wednesday, although the EV giant has been a loser this year, lost about 52% in 2022, retreating to levels near when the company joined the S&P 500. Tesla shares angled higher on Wednesday.
Citi analyst Itay Michaeli moved Tesla stock to “neutral” up from “sell” on Wednesday. Michaeli also raised his price target to $176, up from $141.33 previously. Michaeli told investors that the pullback in Tesla stock in 2022 has “balanced out” short-term risk and reward.
The Citi analyst also pointed to the recently signed Inflation Reduction Act, and its support for the expansion of electric vehicles and lithium batteries, as reasons for long-term optimism on Tesla stock.
Tesla shares rose about 7% during market trading on Wednesday. On Tuesday, shares closed 1.2% higher at 169.91. Early Wednesday, Reuters reported that CEO Elon Musk had stated that South Korea was a top candidate for a potential Gigafactory investment. The remarks were reported by President Yoon Suk Yeol after a virtual meeting between Musk and Yoon.
Analyst Tesla stock optimism
The Citi research note follows Morgan Stanley ( MS ) analyst Adam Jonas wrote late Tuesday that Tesla stock is “approaching our $150 bear case, driven by price cuts in China, slowing EV demand and other market currents (Twitter, Crypto?)”
Jonas did not change his ‘overweight’ rating and $330 price target on Tesla shares. Jonas added that Tesla is expected to see revenue grow 37% in 2023, equivalent to 1.8 million units, with about $15 billion in free cash flow.
“All other pure-play EV OEMs we cover are burning significant amounts of cash on our forecasts,” Jonas wrote.
Tesla on track for worst year ever
“We think Tesla’s gap-to-competition could potentially widen, especially as EV prices swing from inflation to deflation,” he added. for consumer tax and production credits.”
However, Jonas also added his voice to the list of analysts who see Musk’s focus on Twitter, and the evolving news cycle, as a negative for Tesla stock.
On Nov. 11, a key analyst and longtime Tesla stock bull issued a warning that Musk’s Twitter fascination was hurting Tesla.
“Although it is difficult to quantify, we believe that there must be some kind of ‘circuit breaker’ around the Twitter situation to calm investors’ concerns about Tesla,” Jonas wrote on Tuesday.
Tesla Stock, Musk and Twitter
Since Musk took over Twitter on October 28, Tesla stock has fallen about 25%.
Musk has cut roughly half of his social media staff while tweeting frequently about his plans and policies. Musk has also responded personally to customer complaints and suggestions. There has been widespread confusion about the verification features being rolled out, and there is speculation that the company could go bankrupt.
Musk also sold 19.5 million Tesla shares for $3.95 billion on November 4, 7 and 8. The decision to sell some of his Tesla shares came just days after Musk completed his $44 billion purchase of Twitter.
Last week, Musk testified in a Delaware court to defend himself in a shareholder lawsuit.
While testifying, Musk said he expects to “reduce my time on Twitter and find someone else to run Twitter over time,” according to news reports.
Follow Kit Norton on Twitter @KitNorton for more coverage.
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