What happened
Actions of Tesla (NASDAQ: TSLA) It fell sharply on Thursday morning, declining around 5% shortly after the market opened.
The drop in shares is likely due to an analyst’s decision to reiterate a stock sale rating.
Tesla Model X. Image source: Tesla.
And that
Citigroup Analyst Itay Michaeli raised his 12-month price target for growth stocks by more than 80% on Thursday. This is in response to Tesla’s recently reported strong deliveries in the second quarter, as well as operating expenses in 2020 that may be lower than its initial estimates for the year.
But here’s the trick: The new target price is roughly 70% below where stocks are trading now. Michaeli gave the stock a price target of $ 450, up from $ 246 previously. But the shares are located not far from $ 1,500.
There is a “lack of evidence” to corroborate the increase of almost 500% of the shares in the last 12 months, says the analyst. In particular, he wonders if demand will continue to rise rapidly in this environment and if emerging competition may be a greater threat than investors anticipate.
Now what
Investors will likely receive a timely window next week on how demand for Tesla vehicles is doing. The automaker reports second-quarter results after the market closed on Wednesday, July 22.
In its quarterly updates, Tesla generally provides feedback on the trajectory of its vehicle order volume and its forecast for year-round deliveries. Both of these little things will help give investors a better idea of how much demand the automaker is seeing.
