RBC Capital Markets analyst Joseph Spak ended his bearish call on Tesla Inc. stock in TSLA,
Thursday with an upgrade to sector performance from below par. Tesla shares are up 2.9% in premarket trading Thursday. “There is no gracious way to say this other than to say that we have TSLA’s stock completely wrong (even if our foundational vision was not too far off until now),” he wrote in a note to customers. “Our biggest miss was how TSLA can take advantage of its share price to raise cheap capital and fund capacity expenditures and growth.” He said these dynamics allow Tesla to easily fund its future growth, while traditional automakers will have to use a significant amount of money from their current operations to fund their electric vehicle ambitions. In short, the higher stock price somewhat lives up to TSLA’s growth potential, ”he wrote. Furthermore, Tesla’s stock is “the ultimate sentiment pendulum,” said Spak, and the company serves as the “poster child” for electric vehicles at a time when momentum for the category is on the rise in many regions. In the end, Spak set a sector performance rating for the stock, saying that “the current valuation assumes high growth assumptions and strong execution”. He raised his price target from $ 339 in his note to customers to $ 700. Tesla stock is up 78% in the past three months as the S&P 500 SPX,
added about 10%.