You could view the declining stock of Tesla ($TSLA) as a buying opportunity for your online trading. In fact, stock market experts at Robert W. Baird, quoted by Investopedia, seem to think so. Now let’s give you a bit of a background check into the situation at Tesla.
Tesla CEO Elon Musk has the desire to acquire SolarCity Corporation (SCTY), the solar energy company run by Musk’s cousins, in order to avoid competition when Tesla develops solar power plants. However, the market does not think the company should go for it since investors believe it cannot afford it with its high cash burn rate. Investors also do not think that buying SolarCity will do anything to grow the profits of Tesla even if the latter somehow managed to raise the money to do it.
As usual, these concerns in the market have taken their toll on Tesla’s share value that has fallen 13% in thirty days and 10% in just the past week. Baird analysts, however, feel that this declining share value presents an opportunity to buy for traders. They remind that the challenge to raise capital and the near-term liquidity are not anything new with regard to Tesla. The fear investors have regarding the possible dilution of share price isn’t really justified, since Musk had already indicated that dilution caused by new funding was expected. Musk had projected the dilution to be in the region of low or mid-single digits. Baird analysts believe that the investor concern and market pressure are overblown.
Shares of $TSLA closed at $197.78 on Friday, the 2nd of September, a drop of 1.49%. They hit a $236.63 high on the 1st of August. The market somehow considers this to be the top. But Baird is bullish, with the $240 consensus price target that suggests gains in the region of 21%.
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