Controversial electrical automaker Tesla Inc (NASDAQ:TSLA) divides market opinion like no other stock, with vocal bear and bull camps competing for the final word. Ahead of the much-anticipated Model 3 electric vehicle production in July, how can investors make a clear decision on such a complex stock with such an uncertain outlook? We turned to TipRanks score system to see what the experts are saying.
TipRanks’ unique score system combines six different elements of the market into just one score. We calculate this score by tracking expert sentiment, news and crowd wisdom and other data points on TSLA usually only available to hedge funds. The result: investors can make a clear, data-based, decision on whether now is the right time to invest.
In this case, TSLA has an overall score of 6.8, easily beating the consumer goods sector average of 6 but still lagging consumer goods giant Apple which has a score of 7.7.
Wall Street Analysts – with a score of just 5, the consensus rating from all analysts is hold with a fairly equal split between buy, hold and sell recommendations. Interestingly, the 12-month analyst price target of $246 represents a -3.27% downside from the current share price- while the price target from only the best-performing analysts is just a -0.5% downside.
Four-star Oppenheimer analyst Colin Rusch reiterated his TSLA hold rating on March 22 saying the stock is “fraught with risk”. Although he sees value in the Tesla brand, ADAS (advanced driver assistance system) technology, and commercializing EV (electrical vehicle) drivetrains, the analyst concludes “operating leverage remains more promise than reality. We reiterate our Perform rating as we look for clear signals on Model 3 ramp progress, potential for new strategic partnerships/investments, and concerns about execution risk.”
Financial Bloggers– TipRanks’ unique natural language processing (NLP) algorithms extract relevant stock opinions from thousands of top financial blogs. In fact, TipRanks research found that in 2016 bloggers actually had a higher success rate on their buy transactions than Wall Street analysts (64% vs 62%). Bloggers are divided on Tesla’s outlook (giving a vaguely positive 5.7 score).
On the bullish side, Richard Saintvilus is hyped up about a possible 2018 launch for a new Model Y which is understood to be a more expensive-version of the upcoming $35,000 Model 3. However, the more bearish Paul Santos points out the risk inherent in Tesla’s dependence on access to fresh equity to stay afloat especially given that S&P put the automaker’s ‘B-’ credit rating on creditwatch ‘negative’ from ‘stable’ following the $2 billion SolarCity acquisition in August.
Corporate Insiders– Tesla’s insider score of 6.6 has been boosted by controversial CEO Elon Musk’s recent informative buy transaction. On March 21, Musk bought Tesla shares worth $25 million taking his total TSLA stock value to a whopping $9.3 billion. Before this purchase, Musk’s three previous insider transactions were informative sells of total stock worth approx. $593 million over a period of 10 months.
Hedge Fund Managers– by analyzing 13F forms filed with the SEC every quarter we can see that for Tesla a relatively positive hedge fund trend is apparent. In the last three months, hedge funds increased TSLA holdings by 23,400 shares, leading to a score of 5.8. While big-name fund manager Philippe Laffont initiated a new $8.5 million position in Tesla, Theofanis Kolokotrones upped his existing holding by 14.5% to $250 million of shares. Conversely three fund managers sold out their Tesla positions completely.
News Sentiment–Tesla has an incredibly high news sentiment score of 9.4. Indeed, this TipRanks’ news graphic immediately reveals how Tesla news falls at the very bullish end of the score spectrum, even compared to the consumer goods sector average:
The positive articles pulled up by TipRanks in the past week cover, for example, the fact that car dealers are uncertain about how to price General Motors new electrical vehicle, the Chevrolet Bolt- a problem Tesla avoids by selling directly to customers rather than through a distributor.
TipRanks Users– crowd insights are a fundamental feature of TipRanks’ award-winning Smart Portfolio platform. Tracking the 120,000 active TipRanks portfolios reveals that, at 8 out of 10, Tesla has a very high user score. However- most tellingly perhaps- we discovered that while the average TipRanks portfolio has Tesla as the 7th biggest stock in their portfolio (at 3.7%), the best-performing portfolios do not have Tesla in their top 10 stocks at all.