Tesla Inc. stock is caught up in the tech selloff as well as some company and industry headwinds, but that doesn’t mean investors should shy away from the “highly attractive entry point” the pullback has created.
That’s from CFRA analyst Garrett Nelson, who said in a note Tuesday that even though Tesla TSLA, +11.95% shares “have recently gone on sale,” the company is “one of the market’s most compelling growth stories – an investment with long-term return potential similar to tech disruptors such as (Apple Inc. AAPL, +3.45% ) or (Amazon.com Inc. AMZN, +2.50% ) several years ago.”
Tesla shares have lost 44% this year, compared with losses of around 21% for the S&P 500 index. SPX, +2.62% But it is still the best performing auto maker stock in Nelson’s screens, with other major auto makers down on average around 52%, the analyst said.
“Tesla has been unfairly punished by the market and the company is not being given credit for several key positives in the story,” Nelson said.
That includes “exceptional” operational and earnings execution, potential production growth from its new factories in Austin, Texas, and in Berlin, Germany, and “dramatic balance sheet improvement and an impressive pipeline of future products.”
Markets may also underestimate the role that record-high gas prices could play in driving EV sales volumes, he said. Tesla could also surprise markets by bringing its electric pickup truck, the Cybertruck, and its commercial electric truck, the Semi, to market earlier than expected, Nelson said.
Tesla stock is down 33% so far in the second quarter, and has lost about 30% since Chief Executive Elon Musk made his bid for social-media company Twitter Inc. TWTR, +2.06%
The concerns that Twitter would be “too much of a distraction” for Musk and Tesla are “overblown,” Nelson said in his note. Musk has surrounded himself by a “highly capable” executive team at Tesla and has been able to balance growth at both Tesla and space company SpaceX for several years, in addition to his other companies, the analyst said.
Musk has chimed in about the state of the U.S. economy and the possibility of a recession. Earlier Tuesday, the Tesla CEO said that a recession “is inevitable at some point.”