Joseph Spak, an analyst at RBC Capital Markets, closed his option to write off Tesla Inc. TSLA shares,
Thursday with an update for underperforming industry performance. Tesla’s shares were up 2.9% in Thursday’s premarket. “There is no elegant way to put this other than to say that we understand TSLA’s actions to be completely wrong (even if our fundamental view so far has not been very wrong),” he wrote in a note to customers. “Our biggest flaw was how the TSLA can take advantage of its stock price to raise capital cheaply and finance capacity and growth expenses.” He said that this dynamic allows Tesla to easily finance its future growth, while traditional automakers will need to rely on considerable cash from their current operations to finance their electric vehicle ambitions. “In short, the higher share price is somewhat self-fulfilling for TSLA’s growth potential,” he wrote. In addition, Tesla’s shares are “the ultimate sentiment pendulum,” according to Spak, and the company acts as the “poster boy” for electric vehicles at a time when the category’s momentum is growing in many regions. Ultimately, Spak defined an industry performance rating for stocks because he said his “current valuation presupposes high growth and strong execution assumptions”. He increased his target price from $ 339 to $ 700 in his note to customers. Tesla shares have gained 78% over the past three months with the S&P 500 SPX,
added about 10%.
