Despite Tesla's challenges in Q2, many analysts remain extremely positive about the manufacturer's long-term prospects. Tesla is “one of the market's most compelling growth stories” according to the CFRA, who advises investors not to avoid “highly attractive entry point.”
Tesla stock has been caught in a tech selloff as well as some company and industry headwinds, but that doesn't mean investors should avoid the “highly attractive entry point” the pullback has created, according to CFRA analyst Garrett Nelson, reported MarketWatch. He argues that even though Tesla shares “have recently gone on sale,” the company is “one of the market's most compelling growth stories – an investment with long-term return potential similar to tech disruptors such as Apple or Amazon several years ago.”
Although Tesla shares have lost 44% this year, they are still the most profitable auto maker stock in Nelson's screens, with other major auto makers down on average around 52%, the analyst said. He is sure that Tesla was unfairly punished by the market. “Tesla has been unfairly punished by the market and the company is not being given credit for several key positives in the story,” Nelson said.
Tesla has “exceptional” operational and earnings execution, potential production growth from its new factories in Austin, Texas and in Berlin, Germany, and “dramatic balance sheet improvement and an impressive pipeline of future products.” In addition, markets may also be underestimating the role that record high gasoline prices could play in boosting EV sales. Tesla could also surprise markets by bringing its Cybertruck and Semi earlier than expected, Nelson said.
Tesla's shares began a particular decline after the company's CEO Elon Musk announced his intention to buy Twitter. However, concerns that Twitter will distract Musk from Tesla too much are “overblown,” Nelson said. He is confident that Musk has surrounded himself with a “highly skilled” executive team and has been able to balance growth at both Tesla and SpaceX, in addition to his other companies.
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