Tesla stock split is not the only big catalyst for the EV king, analyst says

Tesla stock split is not the only big catalyst for the EV king, analyst says

Tesla’s three-for-one split, which began after trading closed on Wednesday, is just one of many catalysts propelling stocks, Wall Street analysts crow.

“Following brutal April/May shutdowns due to zero Covid policy, we are now seeing unprecedented production of the Model Y in China following factory upgrades with Musk & Co. “Wedbush analyst Dan Ives said in a note to clients on Thursday.

“Demand is not the issue for Tesla, but supply has been and is now clearly on an upward trajectory with China at its next level of Model Y production, while Berlin and Austin ramp up their production lines later in the year.” , added Ives. “While the choppy macro clearly cuts some demand for Tesla (as well as the industry), we believe demand remains firm for the rugged EV in the US, Europe and China.”

Tesla’s longtime bull reiterated an outperformance rating on Tesla shares and raised its price target to $360 from $333, as adjusted for the stock split.

Tesla shares dropped slightly to $293 at 2:27 pm ET on Thursday and were among the hottest quotes on the Yahoo Finance platform.

Another thing Street is considering is how a bullish move by lawmakers will affect Tesla.

The new $7,500 Inflation Reduction Act tax credit for electric vehicles could be a big boost to Tesla stock and company results, CFRA analyst Garrett Nelson pointed out in a note he authored.

“The signing of the Inflation Reduction Act was the equivalent of ‘Christmas in August’ for Elon Musk & Co., as we consider Tesla to be the biggest winner of the new law, as most versions of the two best-selling electric vehicles (Tesla Model Y) and Model 3) qualify for the $7,500 federal tax credit for EVs effective January 1, 2023,” Nelson wrote. “Previously, all Tesla vehicles had been eliminated from eligibility for the tax credit after reaching the threshold of 200,000 units per manufacturer.”

SHANGHAI, CHINA - APRIL 2, 2021 - A Tesla store for new energy electric vehicles is seen in Shanghai, China, April 2, 2021. On August 17, 2022, Tesla CEO Elon Musk said that would buy English Premier League football club Manchester United.  (Photo credit must be CFOTO/Future Publishing via Getty Images)

A Tesla store for new energy electric vehicles is seen in Shanghai, China, on April 2, 2021. (CFOTO/Future Publishing via Getty Images)

Nelson — who also reiterated an outperformance rating on stocks with a split-adjusted price target of $415 — also thinks the aforementioned stock split will serve as a bullish catalyst for Tesla.

“In our opinion, stock splits don’t fundamentally change anything – the impact is more psychological, as companies with improving prospects and rising stock prices tend to execute stock splits,” Nelson explained. “It’s worth mentioning that studies have shown that stocks that split tend to outperform the broader market in the 1-3 years after the split. A lower share price can also attract retail investors.”

Brian Sozzi is a general editor and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi is at LinkedIn.

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