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Is Tesla Stock a Buy At the $700 Level?

Trading nearly 40% down YTD, the Wall Street consensus is that there’s a good opportunity to buy Tesla shares at current levels.

Although they’ve seen a slight uptick since the end of May, Tesla shares are still down a whopping 40% year-to-date. The EV manufacturer has faced several headwinds, including supply chain issues, China’s lockdowns, and a distracting Musk-Twitter deal. 

But investors may find Tesla’s weakened shares to be a solid buying opportunity. Wall Street seems to think so, with analysts’ consensus pegging TSLA shares as a “moderate buy.”

Here, we present a few of the many diverse opinions Wall Street experts have on Tesla.

Figure 1: Is Tesla Stock a Buy At the $700 Level?

Figure 1: Is Tesla Stock a Buy At the $700 Level?

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Tesla's Q2 Deliveries Should Not Be A Problem

Morgan Stanley analyst Adam Jonas, remains bullish on Tesla, even though he reduced his price target to $1,200 from $1,300. That reduction, according to Jonas, is due to Tesla's Q2 delivery forecast volume being cut to 270,000 units from 316,000. Consequently, FY 2022 delivery volume is forecast to be 1.39M, instead of the 1.425M previously forecast.

Jonas is still more upbeat on Tesla’s delivery prospects than other analysts, though. EV-Volumes.com predicts that Tesla in Q2 will deliver only 254,200 units for this upcoming quarter. But Jonas believes that the company's unique ability to quickly ramp up production will be a difference maker, especially in the last weeks of the quarter. He therefore sees Tesla’s forecast as achievable.

Despite his slight price target cut, Jonas still sees 70% upside for TSLA shares, based on the current share price of $700. The analyst also says he’d accumulate more Tesla shares should there be a slight drop in price due to a weak Q2 report.

Tesla Stock Will Rebound As China Situation Improves

Wedbush analyst Dan Ives is a well-known Tesla bull. He continues to list the company as one of his top tech picks. As mentioned by the analyst, China’s Zero-Covid policies created both supply and demand disasters for the company. Mr. Musk has also received a PR black eye thanks to his tumultuous Twitter deal negotiations. Both these events, Ives believes, have weighed on TSLA stock's recent trading performance.

However, as we move towards the end of June, Ives believes TSLA should begin to see some light at the end of the tunnel, as both production and demand issues become resolved in China.

Though Tesla has announced a slowdown in hiring and plans to cut 10% of its salaried staff, Ives points out that many companies are cutting in less profitable areas to preserve margins. The analyst also sees new hiring in manufacturing, especially in Austin, a ramp-up in Berlin, and a potential second factory in China as indicators of the company’s continued growth.

Ives has set a price target of $1000 per share for TSLA. At the company’s current ~$700 level, that implies a potential upside of more than 40%.

Tesla's Valuation Is A Concern

On the more pessimistic end of the spectrum is Barclays analyst Brian Johnson, a long-time Tesla bear. According to Johnson, the stock’s valuation is simply disconnected from reality. With a price target at $370 per share, the analyst believes shares have another 50% to fall before they reach their fair value.

Johnson, looking at the gap between TSLA’s $1 trillion valuation and its $200 billion target, says there is a lot of “fluff” built up around Tesla’s investments in robots, robotaxis, and alternative energies, all of which remain very speculative.

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)