citigroup (C) updated Tesla (TSLA) on Wednesday, though the EV giant has been an underdog this year, shedding about 52% in 2022 and bouncing back to levels close to when the company joined the S&P 500. Tesla shares rose Wednesday .
Citi analyst Itay Michaeli moved Tesla stock to “neutral,” versus “sell,” on Wednesday. Michaeli also raised the price target to $176, up from the previous $141.33. Michaeli told investors that withdrawing Tesla stock in 2022 “balanced” the 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 about Tesla stock.
Tesla shares were up about 7% during market trading on Wednesday. Shares closed 1.2% higher at 169.91 on Tuesday. On Wednesday, Reuters reported that CEO Elon Musk had said South Korea was the best candidate for a potential investment in Gigafactory. The remarks were relayed by President Yoon Suk Yeol following a virtual meeting between Musk and Yoon.
Analyst Optimism on Tesla shares
The Citi research note follows Morgan Stanley (MS) analyst Adam Jonas wrote on Tuesday that Tesla stock “is nearing our $150 bearish case, driven by price cuts in China, decelerating demand for electric vehicles and other market currents.” (Twitter, Crypto?)”
Jonas did not change his “overweight” rating and $330 price target on Tesla stock. Jonas added that Tesla is expected to see its revenue grow 37% in 2023, the equivalent of 1.8 million units, with about $15 billion in free cash flow.
“All of the other pure play EV OEMs we cover burn substantial amounts of cash, according to our forecast,” Jonas wrote.
Tesla on track for worst year ever
“We believe Tesla’s ‘competitive gap’ has the potential to widen, particularly as EV prices move from inflationary to deflationary,” he added. “Regarding the (Inflation Reduction Act), we believe Tesla is by far the best-positioned OEM in terms of potential consumer tax eligibility and manufacturing credits.”
However, Jonas also added his voice to the list of analysts who see Musk’s attention on Twitter, and that evolving news cycle, as negative for Tesla stock.
On Nov. 11, a key analyst and longtime Tesla bull issued a warning that Musk’s Twitter appeal was hurting Tesla.
“While difficult to quantify, we believe there needs to be some form of sentiment ‘switch’ around the Twitter situation to calm investor concerns about Tesla,” Jonas wrote on Tuesday.
Tesla shares, Musk and Twitter
Tesla shares are down about 25% since Musk took over Twitter on Oct. 28.
Musk has cut about half of the social media site’s staff as he tweeted frequently about his plans and politics. Musk has also personally responded 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 out of business.
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 finalized 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 handle Twitter over time,” according to news reports.
Follow Kit Norton on Twitter @KitNorton for more coverage.
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