Veteran Shark Tank judge Barbara Corcoran dismissed some Wall Street analysts' decision to downgrade Tesla (NASDAQ: TSLA) shares. In an interview, Corcoran defended Elon Musk and explained why Tesla could take on incoming EV competition from legacy automakers, like Porsche and BMW.
“All you have to do is get a Tesla or borrow one and drive around, and you are sold. These guys are just hedging their bets, they don’t want to be wrong in their predictions, so they’re taking it down a little. It’s all nonsense,” said Corcoran.
TSLA shares have been soaring towards US$500, making Wall Street cautious about the ever-rising star in the auto industry. Baird downgraded the EV automaker’s shares from outperform to neutral recently. Robert W Baird & Co. analyst Ben Kallo downgraded his buy-rating, which has remained the same since March 2016. He explained that after years of Tesla outperforming, it's finally time for investors to turn a profit with the stocks reaching US$500 per share. Kallo set a price target of US$525 for TSLA, reported Bloomberg.
CFRA also downgraded Tesla from hold to sell. Bernstein did not downgrade TSLA stock like Baird and CFRA. However, Bernstein technology analyst Toni Sacconaghi’s prediction for Tesla’s Q1 2020 results stated that the all-electric car maker may be weaker compared to Q3 and Q4 2019. Sacconaghi seems to believe that Model 3 sales will drop in Q1 2020 because of eliminated subsidies in the United States and the Netherlands. MIC Model 3 sales seem to not be mentioned in his analysis, based on the CNBC report.
In her interview with Yahoo Finance, Corcoran didn’t seem fazed by TSLA’s downgrade and didn’t have much confidence in the Wall Street analysts' analysis or predictions.
The Shark Tank investor seemed sure that Tesla was an excellent product for consumers. She was asked about her thoughts on the “impending competition” Tesla would have to face now that automakers like Porsche and BMW have entered the EV game.
The Yahoo Finance host brought up a common TSLAQ and TSLA bear case. It is believed that Tesla’s vehicles would be killed once legacy automakers enter the fray. This argument is often made because Tesla is misunderstood due to the spread of misinformation or lack thereof. This is evident in the Yahoo Finance host’s presentation of the argument and the fact that he admitted that he had never actually driven a Tesla vehicle.
Corcoran didn’t seem worried about Tesla’s potential competition, though. “You know what’s wrong with that? The old guy never creates new tricks, and they never catch up.”
Corcoran’s answer reflects the thoughts of much of the Tesla community and resilient TSLA bulls. Many analysts and Tesla skeptics often compare the company to the auto industry’s old standard. However, Tesla’s vehicles are creating a new standard in the automobile market, which traditional automakers haven’t been able to match so far.
Currently, several automakers have been bitten by the EV bug, but not a lot has actually released a vehicle that could seriously rival a Tesla vehicle. The Porsche Taycan was called a Tesla killer for a while, but then its actual range was released by the EPA, and it became evident that it was not. For the Taycan’s price tag, it should at least match the range of Tesla’s older models.
As for the other competition the Yahoo Finance host mentioned, BMW, it has only released the i3, an aging electric car released as a rival to the original Model S. Tesla’s oldest vehicle—since Elon Musk took hold of the company—the Model S, would still be the more practical choice for customers compared to the i3 and its modest specs and performance.
There is also the Jaguar I-PACE, which could be the closest to Tesla’s vehicles in terms of standards--according to TSLA bears. However, the I-PACE's technology is nowhere near Tesla’s. Jaguar has yet to master over-the-air updates, let alone full self-driving capabilities.
There are many more examples--including Ford’s Mustang Mach-E--of EVs that could be Tesla-killers. However, they all usually miss one aspect of Tesla’s cars or another. And that is simply the fact that they are built from the ground up to be different and disruptive. Teslas are, as the veteran Shark Tank judge suggested, at a completely different level.
Featured Image Credit: Yahoo Finance