- The recent decline in Tesla shares represents “a massive buying opportunity,” Wedbush’s Dan Ives said.
- Ives said the recent pullback in EV stocks would be short term as companies digest their gains.
- Ives expects Tesla to hit a $US1 ($1) trillion market cap in 2021.
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Investors looking for “a massive buying opportunity” should look at Tesla, the Wedbush analyst Dan Ives said in a note on Monday.
Shares of Tesla are off 33% from its all-time high. A surge in interest rates over the past month has sparked a rotation out of high-growth tech stocks and into cyclical stocks poised to benefit from an economic reopening.
Ives said three factors had also hurt Tesla shares in recent weeks: valuation concerns, increased global competition in the electric-vehicle space, and a shortage in chips and China demand “causing softness out of the gates so far in 2021.”
But now “is not the time to panic,” Ives said, as the recent weakness in EV stocks will be short as companies digest their gains.
“The sell-off we have seen in EV land creates a massive buying opportunity in our opinion to own Chinese EV players as well as the leader of the pack Tesla heading into this golden age of EVs,” Ives said.
The fundamentals remain strong for the space, as tax incentives and the Biden administration’s green-energy agenda should help spur significant demand for EVs over the coming months, the note said.
Ives expects EV sales to represent 20% of all auto sales globally by 2030, a significant increase from 3% today.
Ultimately, Ives sees significant upside for Tesla; he expects the company to hit a $US1 ($1) trillion market valuation before the end of the year. With a market capitalization of $US574 ($750) billion on Monday, Tesla would have to surge 75% to hit a $US1 ($1) trillion valuation, assuming its outstanding shares remained constant.
“In the EV party, its 8pm, not 2am,” Ives said.