Tesla shares have “gone on sale,” according to an analyst. Here’s what investors should do

Tesla Inc. shares are being gripped by the tech sell-off as well as some corporate and industry headwinds, but that doesn’t mean investors should shy away from the “highly attractive entry point” the pullback has created.

That’s from CFRA analyst Garrett Nelson, who said in a note Tuesday that although Tesla is TSLA,
Shares “have recently gone on sale”, the company is “one of the most compelling growth stories in the market – an investment with long-term return potential, similar to technology disruptors like (Apple Inc. AAPL,
) or ( Inc. AMZN,
) a few years ago.”

Tesla shares are down 44% this year, compared to losses of around 21% for the S&P 500 index. SPX,
But it’s still the best-performing automaker stock in Nelson’s view, while other big automakers are down about 52% on average, the analyst said.

“Tesla has been unfairly punished by the market, and the company is underestimated for several important positive aspects of the story,” Nelson said.

These include “extraordinary” operating and earnings performance, potential production growth from new facilities in Austin, Texas and Berlin, Germany, as well as “dramatic balance sheet improvements and an impressive pipeline of future products.”

Markets may also be underestimating the role record-high gas prices could play in boosting electric vehicle sales volume, he said. Tesla could also surprise markets by launching its electric pickup truck, the Cybertruck, and commercial electric truck, the Semi, earlier than expected, Nelson said.

Tesla stock is down 33% so far in the second quarter and down about 30% since Chief Executive Elon Musk made his bid for social media company Twitter Inc. TWTR.

Concerns that Twitter would be “too distracting” for Musk and Tesla are “overstated,” Nelson said in his note. Musk has surrounded himself with a “high quality” leadership team at Tesla and has been able to balance growth at both Tesla and aerospace company SpaceX for several years, in addition to his other companies, the analyst said.

Musk has spoken out about the state of the US economy and the possibility of a recession. Earlier Tuesday, Tesla’s CEO said a recession “is inevitable at some point.” Tesla shares have “gone on sale,” according to an analyst. Here’s what investors should do

Brian Lowry

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