(Bloomberg) — Tesla Inc. climbed as dip buyers emerged after the electric-vehicle giant’s valuation briefly sank below the $1 trillion mark.
Shares gained 3.2% to $1,056 as of 1:46 p.m. in New York, halting a three-day selloff that wiped out more than $200 billion from its market capitalization. Tesla was the second-most bought asset on Fidelity’s retail brokerage platform on Wednesday, only behind electric-truck maker Rivian Automotive Inc., which soared in its trading debut.
The sharp moves in Tesla came after strong results in October and a large order from car-rental company Hertz Global Holdings Inc. spurred a rally that was interrupted by a barrage of negative news, led by concerns about Chief Executive Officer Elon Musk selling off 10% of his stake in the company. Traders then reassessed prospects for Tesla, betting on its potential for rapid future growth as electric vehicles become mainstream and eventually replace gas-driven cars.
For Dan Ives, an analyst at Wedbush Securities, the recent selloff was an “overreaction” to the Musk stake-sale news.
“Fundamentally speaking, Tesla remains in pole position to drive this EV adoption curve to the next level both domestically and globally with Musk & Co. leading the way,” Dan Ives, an analyst at Wedbush Securities wrote in a note.
Meantime, Roth Capital Partners’s Craig Irwin said that some of the selling pressure of the past few days might also be related to Rivian’s debut. However, “Tesla is the outsize leader in EVs, so we’re not surprised the stock is seeing a bounce,” he added.
Read: Rivian Reaches $98 Billion Value With Jump in Trading Debut
Bank of America Corp.’s John Murphy raised his price target on Tesla to $1,200 from $1,000, but maintained a hold-equivalent rating.
“Capital for EV makers is widely available and cheap in current market conditions, so we believe momentum/support for many of the stocks” will persist, Murphy wrote in a client note Wednesday.
Profitability has been helped by Tesla’s deft navigation of the semiconductor shortage that has crippled many other car companies. The firm makes two of the best selling electric vehicles globally — the Model 3 and Model Y — despite a big push from legacy automakers to develop competitors, and the emergence of several new players.
The automaker’s stock has soared about 50% this year, compared with a nearly 25% gain for the S&P 500.
(Updates prices, adds tout.)
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