Tesla shares are being driven more by Reddit posts rather than the automaker’s fundamentals or valuation, Barclays study finds

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Tesla CEO, Elon Musk.

  • Tesla’s stock performance is positively correlated to the number of Reddit posts citing TSLA, Barclays found.
  • The automaker has seen outsized attention from retail investors with active discussions on social media. 
  • “We have painfully learned that social media memes can matter more for TSLA share performance.”
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Tesla’s stock performance might just be linked to online chatter over the automaker on social media forums like Reddit, according to a Barclays study released on Tuesday.

“On the autos team, we have painfully learned that social media memes can matter more for TSLA share performance than actual financial metrics, fundamentals or (dare we say) valuation,” strategists Ryan Preclaw and Brian Johnson wrote.

Barclays examined data on the Wall Street Bets subreddit to find big upticks in posts about Tesla have been predictive of stock returns a few days later. “In the model we think is most appropriate, a swing up of 7 or more submissions today over yesterday has been predictive of outsized returns in TSLA stock tomorrow,” the investment bank said.

The strategists laid out a scatter plot that suggests there is at least some relationship between attention on Wall Street Bets and Tesla returns. In conducting the analysis, Barclays focused on posts that reference either $TSLA or TSLA (in all caps), and no other identifiable ticker. 

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The strategists said there are statistically significant relationships between the number of returns and the absolute number of posts one and two days earlier, and between changes in post counts and following days’ returns.

“However, all of this analysis is ‘in sample.’ The situation has been so dynamic that there are simply too few examples to be confident of a stable process between WSB posts and TSLA returns,” Barclays said. “Even more than usual, past results might not predict future performance.”

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Tesla tumbled as much as 20% this week, making CEO Elon Musk relinquish his title as the world’s richest person. Shares in the EV-maker sank after the company halted new orders for its cheaper version of the Model Y crossover. The drop was also partly driven by Musk tweeting that the prices of bitcoin and Ethereum “do seem high” after their recent rallies. Tesla was trading 1.6% lower, at $730 per share, in pre-market trading on Thursday.

“With only 2-3 total submissions on each of the past several days, we remain below the trend in attention that has come along with big returns jumps in the past,” Barclays said. “It remains to be seen if WSB posters bring their attention back to TSLA anytime soon.”

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Tesla’s stock is now ‘heavily tied’ to the fate of bitcoin after the company’s $1.5 billion purchase

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Elon Musk.

  • Tesla’s $1.5 billion purchase of bitcoin last month means the company’s stock is “heavily tied” to the digital currency, Wedbush analyst Dan Ives said in a note on Tuesday.
  • Tesla stock has dropped 21% since it announced its purchase of bitcoin earlier this month.
  • “It’s ‘buckle up the seat belt time’ again for Tesla’s stock with more volatility on the horizon,” Ives said.
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Tesla stock is “heavily tied” to bitcoin following its $1.5 billion purchase of the cryptocurrency last month, Wedbush analyst Dan Ives said in a note on Tuesday.

While Tesla’s purchase of bitcoin represents a “small amount” of the company’s overall cash position, perception is reality on Wall Street, with investors starting to tie bitcoin and the EV manufacturer “at the hip,” Ives said.

Tesla likely made paper profits of $1 billion on its January purchase of bitcoin, more than the profits it made on its underlying car business in 2020, according to Ives.

“There is a lingering worry that the bitcoin sideshow could overshadow the overall EV growth story playing out for Tesla in 2021 and beyond in the eyes of the street,” Ives explained.

In recent days, the swift drop in bitcoin has likely helped fuel a decline in shares of Tesla.

Bitcoin has declined by more than 20% from its recent high of more than $58,000, and shares of Tesla have fallen more than 20% since it announced it purchased bitcoin on February 8. 

But bitcoin represents a double-edged sword for Tesla, and could work out for the company in the long-term as more companies embrace the cryptocurrency.

“We continue to believe the bitcoin move was a strategic one for the long-term and will have a ripple impact as Square, Mastercard, MicroStrategy and now Tesla embrace bitcoin,” Ives explained.

Cathie Wood of Ark Invest likely agrees with Ives, given that ARK’s ETF strategies have been buying the dip in shares of Tesla. Across all of its ETFs, Ark purchased more than 200,000 shares of Tesla amid its decline on Monday, according to Ark’s daily trading log. 

Wedbush reiterated its Neutral rating on Tesla and maintained its $950 price target for the company. 

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Tesla’s stock price surged 740% in 2020. Here’s where 5 analysts say the shares are headed next.

FILE PHOTO: The logo of Tesla is seen at a branch office in Bern, Switzerland March 25, 2020. REUTERS/Arnd Wiegmann
Logo of Tesla is seen at a branch office in Bern

  • Tesla’s stock price skyrocketed 740% in 2020, but Wall Street is split on where the shares will move next.
  • JPMorgan sees the electric vehicle company plummeting 87% to $90 a share in 2021. Meanwhile Goldman Sachs has a 12-month price target of $780 for Tesla. 
  •  Here are five Tesla price targets from Wall Street’s top strategists.
  • Visit Business Insider’s homepage for more stories.

2020 was a wild ride Tesla’s stock. It opened on January 2 2020 at $84.90 (adjusted for the stock split) and will close 2020 above $700-that’s a gain of over 740%. Here’s where five analysts say Tesla shares are headed in 2021. 

JPMorgan

JPMorgan analysts rate the stock “underweight,” with a price target of $90, an 87% drop from current levels. 

Tesla stock is “in our view and by virtually every conventional metric not only overvalued, but dramatically so,” a team of JPMorgan analysts led by Ryan Brinkman said earlier in December.

Goldman Sachs 

Goldman Sachs has a “neutral” rating for Tesla and 12-month price target of $780. On December 2, analysts led by Mark Delaney raised the price target to $780 from $455, telling clients: “We believe that the shift toward battery electric vehicle (EV) adoption is accelerating and will occur faster than our prior view.” 

Read more: Jeremy Grantham’s GMO called the dot-com bubble. His firm now sees ‘very odd and speculative things’ going on again – and warns large US stocks could see negative returns over the next 7 years.

Wedbush Securities

Wedbush’s Dan Ives rates the stock “neutral,” with a 12-month price target of $715, and a bull case price of $1000.

“Heading into year-end and 2021, we are seeing a major inflection of EV demand globally with our expectations that EV vehicles ramp from ~3% of total auto sales today to 10% by 2025,” Ives said on Dec 29 in a note to clients. “We believe this demand dynamic will disproportionately benefit the clear EV category leader Tesla over the next few years especially in the key China region which we believe could represent ~40% of its EV deliveries by 2022 given the current brisk pace of sales.” 

CFRA Research

Garrett Nelson, senior equity analyst at CFRA Research senior equity strategist has a “hold” rating on Tesla and a 12-month price target of $750.

“After a YTD run-up of over 700%, we think future growth expectations are now appropriately bullish and after a multi-quarter run of positive news, we struggle to identify the next catalyst in the story. In early January, TSLA will report Q4 vehicle production/sales, and we continue to forecast it will fall just shy of TSLA’s full year sales goal of 500K units,” Nelson said. ” While TSLA has materially strengthened its balance sheet through recent equity offerings, the company’s longer-term growth plans will require significant capital and we anticipate TSLA will face some bona fide competition in the EV space from Lucid, Rivian, and others in 2021.” 

RBC Capital Markets 

RBC Capital Markets has a $339 price target for Tesla, more than a 50% drop from current levels.

“Our $339 price target takes a look at EV/sales- and EV/EBITDA-based multiple approaches and probability weights them (65% base, 17.5% each for upside/downside),” analysts led by Joseph Spak said on Dec 22. 

Read more: JPMorgan unveils its 50 ‘most compelling’ stock picks to buy for 2021 – and details why each one will be a top performer

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Tesla could soar another 300% as the company expands its tech outside of the auto industry, says a prominent VC investor

FILE PHOTO: Tesla Inc CEO Elon Musk dances onstage during a delivery event for Tesla China-made Model 3 cars in Shanghai, China January 7, 2020. REUTERS/Aly Song/File Photo
Tesla Inc CEO Elon Musk dances onstage during a delivery event for Tesla China-made Model 3 cars in Shanghai

  • Tesla could soar over 300% to reach $2,500 in the next three years, says venture capitalist and veteran tech analyst Gene Munster.
  • The Loup Ventures co-founder told CNBC Tesla will use its current technology to expand beyond the auto industry and into areas like insurance, autonomy, and HVAC.
  • “They’re going to evolve outside of cars longer term,” Munster added.
  • Shares of Tesla reached an all-time high of $615 shortly after the opening bell on Monday. 
  • Visit Business Insider’s homepage for more stories.

Tesla could soar over 300% to $2,500 within the next three years, according to venture capitalist and veteran tech analyst Gene Munster. A move like that would push Tesla’s current $567 billion market capitalization to over $2 trillion. Only one other company in the world-Apple-has passed that number to date.

The Loup Ventures co-founder told CNBC on Monday that Tesla will evolve over the next few years to become more than just a car company.

“They’re really going to take their tech that they’re defining and pioneering with auto and apply it to new markets,” he said.

Munster discussed how Tesla CEO Elon Musk recently said that the company may enter into the insurance business, HVAC space, and autonomous vehicle industry. 

“Elon has recently said that 30 to 40 percent of the value the car could be in insurance,” said Munster. “What that means is that they can start offering their own insurance and improve margins. That’s high margin revenue, not to mention everything they’re doing around over-the-air updates with autonomy and what they can even do around HVAC.”

Read more:Market wizard Chris Camillo grew his trading account by $9.7 million in 2020. Here’s the simple strategy he’s using to mint millions.

Munster also pointed to flying taxis as another frontier Tesla may expand to that could propel it’s stock price, though he added: “I would not invest in Tesla based on that, but the concept that this company is going to continue to evolve and be a tech leader in the next decade, I’m on board with that.”

Munster added that the “ship has sailed” for traditional auto companies to compete with Tesla, though Volkswagen followed by GM are in the best positions to “remotely compete” with the electric vehicle maker.

“There’s no substance competition, they’re going to evolve outside of cars longer term,” he said of Tesla.

The venture capitalist, who spent over 20 years as a tech analyst on Wall Street, said that Apple could be the biggest company to compete with Tesla over the longer term. 

“Whatever [Apple’s] ambitions are in vehicles, I mean it’s been really quiet there, I’m not expecting anything in the near term, but that as a Tesla investor would be the one announcement that would cause me to step back and rethink things,” said Munster.

Shares of Tesla reached an all-time high of $615 shortly after the opening bell on Monday. 

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