Tesla Falls Even as Stock Is Upgraded to Outperform

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Tesla

shares were falling sharply Monday. Even the stock being raised to Outperform from Sector Perform at RBC Capital Markets wasn’t a help.

RBC raised its rating on the stock, highlighting the electric-vehicle giant’s “focus on supply chain and vertical integration.” RBC lowered the price target on shares of Tesla (ticker: TSLA) to $1,100 from $1,175. Tesla shares were falling 5.6% Monday to $657.16 as the broader markets fell sharply on fears over inflation and whether Federal Reserve policy to tame it will cause a recession. Tesla stock, specifically, has declined more than 37.7% this year amid concerns about Covid-19 disruptions in China and CEO Elon Musk’s deal to acquire

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(TWTR).

Tesla said in a proxy statement on Friday that it wants to split its stock 3-for-1.

RBC said second-quarter margins at Tesla could surprise to the upside with investors primed for lower deliveries. Analysts surveyed by FactSet expect Tesla second-quarter deliveries of 287,000. 

RBC said that mid-to-longer term it was “increasingly favorable on Tesla’s industry positioning.” The analysts highlighted

With the “industry in the early innings of electrification,” the company has benefited from an “oligopoly-like positioning.” While the automotive market will see more competition during its next phase, and likely lead to share losses for Tesla, the analysts said they weren’t overly concerned.

Tesla’s “early focus on vertical integration (not just batteries/raw materials but also motors, semis, software) is likely to pay off especially as industry supply of critical materials may become an issue in 2027/28 and TSLA may be able to control more of their own destiny,” RBC wrote in a research note. “Indeed, it appears Elon’s Master Plan Part 3 is likely to focus…

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