Research agency sees that private investors are letting down Tesla shares

Shares of electric vehicle pioneer Tesla (TSLA) rose 5% Friday, a day after investors expressed disappointment over the company’s first-ever investor day for analysts.

But an investment research firm says the recovery could be short-lived.

Vanda Research, which tracks investment flows from private buyers and sellers, viewed the company’s investor day as a potential “catalyst” — one that could halt the substantial private investor purchases that have fueled Tesla’s 62% year-to-date stock increase. .

That’s because, Vanda said, Wednesday’s investor day fell short of investor expectations surrounding the release of Tesla CEO Elon Musk’s Master Plan 3 for the company.

The following day, Tesla shares closed 6% lower.

“Tesla’s monthly purchases by private investors are off the charts, likely due to a combination of a relatively low perceived price and excitement surrounding Musk’s master plan,” Vanda wrote in an investigative report. “However, we expect a trend change this month due to the less attractive share price and the recent disappointment in Musk’s latest announcement.”

Musk did not reveal any new product models or provide clear timing during Wednesday afternoon’s presentation at the company’s gigafactory in Austin, Texas.

“If we assume that a large portion of retail buying (in Tesla’s stock) was driven by momentum rather than strong conviction, a stagnation in performance caused by a lack of new ‘rumours’ to buy could result in a significant turnaround in sentiment, investment flows and ultimately the stock price,” Vanda wrote in the report.

From modestly pricey to really expensive in six weeks

While central bank rate hikes aimed at curbing high inflation brought down broader global stock and bond markets, Tesla’s shares plummeted along with other tech-laden stocks in 2022, dropping 65% for the year .

They opened 2023 trading at $123.18 and fell to $101.81 in the first full week of trading of the year.

In the following six weeks, however, they more than doubled to their February 16 year-to-date peak of $217.65 per share. Even after Thursday’s drop, Tesla stock remained at $190.90 per share.

From a valuation perspective, which caused Tesla’s stock to trade at 57 times the company’s trailing 12-month earnings per share, more than three times the comparable P/E ratio of 18 for the S&P 500 index.

Vanda suggested that hedge funds might decide to take short positions on it, especially if inflation doesn’t fall as steadily as investors had hoped last month.

“Institutional investors have significant potential to open new short positions as short-term interest rates have remained relatively stable in recent months,” Vanda wrote in the report.






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