Tesla shares are booming, long-time analysts suggest profit-taking

Tesla’s stock has more than doubled in three months, finally getting a long-term bullish analyst ready to leave, saying investors’ expectations for the electric car maker now appear to have been “reasonablely calibrated.” Since March 2016, Robert W Baird and Co. Analyst Ben Caro has consistently given Tesla a “buy” rating, which was the most turbulent period for Tesla.

On Thursday, he downplayed his view of Tesla, saying “risk/reward stake is more balanced after the recent stock rally.” He now has the equivalent of holding Tesla, but has raised his target price to $525 from $355.

In a note to clients, Mr Caro wrote: “After years of rating the market to win the market, and after a controversial debate with (obviously) highly confident shorts, we recommend profit-taking.” He added that after a difficult two years, he was “exhausted.”

Tesla’s share price has seen a dizzying rise in the past few months after a weak first half of 2019. The stock has risen nearly 18 per cent since 2020.

Tesla’s market sentiment has shifted sharply since it reported a surprise third-quarter profit in late October, boosted shares by strong demand in China and news of better-than-expected fourth-quarter deliveries.

Tesla shares are booming, long-time analysts suggest profit-taking

Tesla’ market capitalisation is now larger than that of General Motors and Ford Motor Co., and its stock hovered around $500 on Thursday, rising 1.4 percent to $498.80 at one point.

Despite the recent decline, Tesla’s short positions remain high. Carlo, however, does not recommend shorting.

“Despite the (overactive) bearish reasons since its inception, the company continues to grow and advance its plans,” he said, predicting that this trend would continue.