Since the U.S. election, Tesla's (TSLA, Financial) market capitalization has soared by over $350 billion, reflecting significant optimism on Wall Street. However, UBS has issued a cautionary note. In a recent report, UBS analysts highlighted that Tesla's stock spike is more due to market excitement rather than substantial business improvements.
The analysts pointed out potential policy shifts could impact Tesla. While some proposals might benefit Tesla, such as eased regulations under the Trump administration for AI and autonomous driving, these are not unequivocally advantageous. Tesla may need to lower prices if consumer tax credits for electric vehicles are removed, to maintain competitiveness.
The UBS report emphasized that Tesla's rise is primarily driven by "animal spirits" and "momentum" in the market. "Animal spirits" refers to irrational investor behavior like herd mentality, and "momentum" denotes stock prices climbing due to previous gains.
UBS analyst Joseph Spak maintains a "sell" rating for Tesla, yet raised the price target from $197 to $226 per share. Recently, Tesla's shares dipped by 1.27%, trading at $348.10.
