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Investors looking for “a massive buying opportunity” should look to Tesla, Wedbush analyst Dan Ives said in a note on Monday.
Tesla shares fell 33% from their all-time high. An increase in interest rates in the past month has generated a rotation of high-tech stocks to cyclical stocks, ready to benefit from an economic reopening.
Ives said three factors have also affected Tesla’s actions in recent weeks: concerns over valuation, increased global competition in the electric vehicle market and a shortage of chips and demand from China “causing softness so far in 2021”.
But now “is not the time to panic,” Ives said, as the recent weakness in EV stocks will be sold as companies digest their earnings.
“The liquidation we saw in the EV field creates a huge buying opportunity, in our opinion, for the Chinese EV players themselves, as well as for the leader of the Tesla group that is entering this golden age of EVs,” said Ives.
The fundamentals remain strong for the space, as the Biden administration’s tax incentives and green energy agenda are expected to help boost significant demand for EVs in the coming months, the note said.
Ives expects EV sales to account for 20% of all auto sales worldwide by 2030, a significant increase from the current 3%.
Ultimately, Ives sees a significant upside for Tesla; he expects the company to reach a $ 1 trillion market valuation before the end of the year. With a market capitalization of $ 574 billion on Monday, Tesla would have to rise 75% to achieve a $ 1 trillion valuation, assuming its outstanding shares would remain constant.
“At the EV party, it’s 8 pm, not 2 am,” said Ives.
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