The brokerage firm thinks skepticism toward Tesla is overblown
It's been a busy news cycle for Tesla Inc (NASDAQ:TSLA). Following Tuesday's headline the Securities and Exchange Commission (SEC) asked CEO Elon Musk be held in contempt for his tweets, the head of the electric car concern tweeted yesterday about "Some Tesla news" that will be unveiled at 5 p.m. EST today. And earlier, TSLA stock received some bullish brokerage attention.
Specifically, Baird tapped Tesla as a "fresh pick," saying the expectations for weak first-quarter deliveries are priced into the stock and concerns over Model 3 demand are overblown. The brokerage firm reiterated its "outperform" rating and $465 price target -- a nearly 48% premium to last night's close at $314.74.
Elsewhere, Morgan Stanley analyst Adam Jonas suggested today's big announcement could be in relation to the company's $920 million convertible bond payment, which is due tomorrow, March 1. Jonas also speculated about a potential "Model Y" update or strategic partnership. Whatever the news, the analyst said TSLA stock "may be fundamentally overvalued," but maintained his "equal weight" rating and $238 price target.
Most analysts are skeptical of Tesla stock, with 12 of 21 maintaining a "hold" or worse recommendation. Plus, the average 12-month price target of $332.01 is a 5.5% premium to current trading levels.
Traders have taken a bearish stance toward the security, too. While options traders have initiated long puts at a rapid-fire rate in recent weeks, nearly 25 million TSLA shares are sold short -- accounting for roughly one-fifth of the stock's available float.
Looking at the charts, Tesla shares are down nearly 18% since their early August highs near $387.50, and their 50-day and 200-day moving averages appear on the verge of forming a "death cross." Today, though, TSLA stock is up 1% to trade at $318.