Tesla, Inc. (TSLA) managed to maintain strong momentum for the first five months of 2020 and has steadily outperformed the S&P 500. Despite the Coronavirus pandemic causing disruptions on its production line, Tesla has fared well, seeing just a slight dip in March. Tesla continues to be a leader in environmentally friendly vehicles.
Overall, hedge funds were actively buying the stock in the first quarter, helping the electric vehicle and clean energy company to land on the WhaleWisdom Heat Map with a ranking of 27. Tesla rose by approximately 123.5% in comparison to the S&P 500’s loss of about 5.9% since the beginning of the year.
Hedge Funds Are Active
Hedge funds were actively buying the stock in the first quarter, and aggregate 13F shares held by hedge funds increased to 28.6 million from 28.1 million, an increase of almost 2%. Of the hedge funds, 58 created new positions, 55 added to an existing holding, 32 exited, and 65 reduced their stake.
Institutions were not quite as faithful to the company, as overall, institutions decreased their aggregate holdings by nearly 4.1% to 93.6 million from 97.5 million.
Mixed Estimates Despite Rising Demand in China
Analysts are bullish on Tesla and forecast strong growth in 2020, with revenue expected to increase by roughly 40%. The company’s 2020 earnings per share estimates are also strong, and are expected to rise to $3.78 per share from $0.20 per share in 2019. Analysts have a favorable outlook for the company, raising price targets. Rising demand in China for electric-powered performance vehicles has contributed to these positive outlooks. Wedbush Securities, Inc. raised their price target on Tesla to $1,000. Wedbush cited accelerating demand in China for the Model 3. Analysts are also looking ahead to a potentially game changing electric car battery developments from Tesla at Battery Day in June of 2020.
Goldman Sachs Group, Inc. lifted its outlook for 2020 automobile sales to -14.5% from -17.5%, with an additional expectation that global automobile sales will rise by 8.5% in 2021. However, Morgan Stanley downgraded Tesla, slashing its price target to $650 from $680 and moving the stock to an Underweight rating. Morgan Stanley points out the long-term risks in a post-Coronavirus world, including fewer powerful players in transportation and ongoing tensions between the United States and China.
While 2020 has started off well for Tesla, it is understandable why analysts have had mixed forecast for the long-term. The continuing tensions between the United States and China and the negative economic impact of the Coronavirus cannot be ignored, however, neither can technological advances coming from Tesla. Tesla’s electric cars are anticipated to soon come close in price with internal combustion engine vehicles, a potential game changer for the automobile industry. With its potential for growth, it may be why hedge funds have been moving into the shares despite the broader stock market turmoil.