Tesla (NASDAQ:TSLA) has been on a hot run lately, with its shares steadily climbing. However, Barclays lowered its rating on Tesla on Wednesday, stating that it is time for investors to take profits on the electric vehicle stock. While there is still some potential for the stock to continue its rally, there are concerns about discounting and margins that could potentially pull the plug on its surge. But what does this mean for investors? Is it really time to sell your Tesla stock?
Barclays analyst Dan Levy and his team believe that the recent AI-driven thematic rally and Supercharger buzz has made it difficult to predict the stock’s movements. Despite previously being generous with their target multiple, the analysts now believe it is time for investors to take profits on the stock. While there is still the possibility of TSLA getting more than a carmaker treatment by the market, with support from different pockets of the investment community, including retail and momentum investors, there is a risk in trying to call the top in the recent rally.
From one investor:
$TSLA now #6 in R1G benchmark at 3.1% weight and #6 in S&P500 benchmark at 1.9% weight. Most institutional PMs remain way underweight TSLA relative to their benchmarks. As @bradsferguson has pointed out (and provided this picture) at least some of TSLA’s explosive rally the past 4 weeks may be PMs buying to get closer to market weights.
Questions on discounting and margins are expected to crop up with the Q2 and Q3 Tesla (TSLA) earnings reports, which could potentially pull the plug on the rally. However, looking further ahead, Barclays continues to see Tesla (TSLA) as the long-term winner amongst OEMs in the race to an electric vehicle world.
Excitement is expected to build again in the late 2024-2025 timeframe as TSLA begins to ramp up the Model 2, its low-cost model. This will mark TSLA’s push for mass scale and is likely to have a positive impact on the stock.
Despite lowering its rating on Tesla, Barclays assigned a price target of $260 to the company. Shares of Tesla (TSLA) rose 1.33% premarket to $278.09.
So, what does this mean for investors? While the recent rally in Tesla’s stock has been impressive, there are concerns regarding discounting and margins that investors should be aware of. However, it is important to remember that Barclays still sees Tesla as the long-term winner amongst OEMs in the race to an electric vehicle world.
Investors need to weigh the risks and benefits of holding onto their Tesla stock. While there is a possibility that the stock could continue to rise, there is also the risk of a pullback. Barclays’ lower rating and price target should be taken into account when making investing decisions, but it is ultimately up to each individual investor to decide whether it is time to take profits on their Tesla stock.
