UBS: Tesla’s Rally Fueled by Investor Optimism, Not Growth

Tesla’s stock closed at $352.56 last week, having added more than $350 billion of market capitalization since election day. (David Paul Morris/Bloomberg News)

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Tesla Inc.’s post-election stock surge has more to do with market exuberance than actual improvement in the fundamentals of its business, UBS Group AG analysts cautioned in a report.

While policy proposals have emerged since President-elect Donald Trump’s victory that could favor Tesla, analysts led by Joseph Spak wrote that the changes wouldn’t be absolute positives for the company.

Removing consumer tax credits for electric-vehicle purchases, for example, could force Tesla to have to cut prices, Spak wrote. He also noted that while the regulatory environment under Trump may be more conducive to artificial intelligence ventures, including autonomous vehicles, Tesla doesn’t have a robotaxi ready to take advantage of relaxed rules.

“The rise in Tesla stock is mostly driven by animal spirits/momentum,” Spak wrote in the report. He maintained a sell rating on the shares while raising his price target to $226 from $197.

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Tesla’s stock closed at $352.56 last week, having added more than $350 billion of market capitalization since election day. The shares advanced as much as 2.6% before the start of regular trading Nov. 25.

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