Tesla surges again in pre-market! UBS pours cold water: The soaring market value is driven by animal spirits rather than improving fundamentals
Since the U.S. election, Tesla's market value has increased by more than $350 billion. UBS analyst Joseph Spak and others pointed out that despite the significant rise in Tesla's stock, the main driving force behind it is the market's "animal spirits" rather than growth in the business itself, and Tesla may not be able to fully leverage policy advantages in the short term. On Monday morning, Tesla's stock price rose nearly 2.7% in early trading before falling nearly 1.4%
Since the election day, Tesla's market value has increased by more than $350 billion, with Wall Street sounding bullish. However, amidst the market frenzy, UBS poured cold water on Tesla.
On Monday, November 25th, Eastern Time, UBS Group AG analysts warned in a report that the surge in Tesla's stock price post-U.S. election is more due to excessive market excitement rather than actual improvements in its business fundamentals. Although there have been policy proposals since Trump's victory that could benefit Tesla, these changes are not all absolute positives for the company.
First, the electric vehicle tax credit may be canceled. While some policy proposals may be favorable to Tesla, not all are good news. If the tax credit for consumers purchasing electric vehicles is eliminated, Tesla may have to lower prices to maintain competitiveness.
Second, a relaxed regulatory environment is more friendly to artificial intelligence and autonomous driving. Under the Trump administration, the regulatory environment for artificial intelligence and autonomous driving technology may be more lenient, but Tesla is currently not ready to launch a fully mature Robotaxi, so it may not be able to fully leverage these policy advantages in the short term.
Joseph Spak pointed out that the rise in Tesla's stock is mainly driven by the market's "animal spirits" or "momentum." Here, "animal spirits" typically refer to irrational behavior by investors, such as herd investing, while "momentum" refers to the trend of stock prices continuing to rise due to previous increases.
Although Spak maintains a "sell" rating on Tesla, he raised Tesla's target price from $197 to $226. On Monday morning, Tesla's stock price initially rose nearly 2.7% before falling nearly 1.4%.
