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Nasdaq Weakness Can't Hold Tesla Back; Competition Hits Beyond Meat

By Dan Caplinger – Sep 18, 2020 at 1:06PM

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Investors had to deal with an ongoing pullback in the tech-led index.

The overall stock market was relatively calm on Friday, but the Nasdaq Composite (^IXIC) found itself on the defensive. After having posted huge gains all summer long, some momentum-following investors appear to be fleeing the tech-heavy index. As of just after noon EDT, the Nasdaq was down 0.75%, even with the Dow Jones Industrials very close to flat for the day.

Yet despite Nasdaq investors seeming uncertain about the future, Tesla (TSLA) shares continued to advance. Things weren't as favorable for plant-based protein specialist Beyond Meat (BYND -1.85%), however, which gave back some of its recent gains.

Another boost for Tesla

Tesla saw its shares rise almost 5% on Friday at midday. The stock got a nice boost following favorable comments from Wall Street.

Today's positive views came from analysts at Piper Sandler, who increased their price target on the electric vehicle specialist by $35. That put the new target at $515 per share, ranking it among the two most bullish outlooks from analysts covering Tesla.

Three Tesla cars in parking lot in front of Tesla factory.

Image source: The Motley Fool.

Piper's comments about Tesla were intriguing, focusing on controversial issues like the pay package for CEO Elon Musk and Tesla's business outside the electric vehicle industry. Areas like battery technology and solar energy deserve greater attention, and while some criticize Musk for his extremely lucrative compensation arrangement, it nevertheless aligns his interests with shareholders'.

Tesla will always get attention from both fans and naysayers. Trying to keep the emotion out of investing decisions with Tesla can be difficult, but the fundamental prospects for the business are extraordinary.

Competition for Beyond Meat? Impossible!

Elsewhere, shares of Beyond Meat were down 6%. The plant-based protein provider took a hit after Wall Street analysts weren't as kind as they were to Tesla.

Analysts at J.P. Morgan downgraded Beyond Meat's stock from neutral to underweight, while CFRA took its rating on the shares from hold to sell. J.P. Morgan also slashed its price target on Beyond Meat by $27, landing at $122 per share.

Few of those covering Beyond Meat have any doubts about the potential growth from plant-based meat alternatives. But they take issue with current valuations. JPMorgan analysts seem concerned that the Beyond Meat stock price fails to reflect the competitive pressures that privately held Impossible Foods is putting on its main rival. With both companies fighting for grocery store shelf space and lucrative partnerships with restaurant chains, the pathway for Beyond Meat to dominate is definitely not a sure thing.

Whether you're looking at tech stocks, electric vehicles, or plant-based foods, a great business model isn't always enough to ensure great returns. Beyond Meat has a lot of promise, and it'll need to execute well to demonstrate its superiority against a rising group of competitors seeking to claim their share of a valuable market.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Beyond Meat, Inc. and Tesla. The Motley Fool has a disclosure policy.

Stocks Mentioned

Tesla Stock Quote
Tesla
TSLA
$194.70 (%)
Beyond Meat, Inc. Stock Quote
Beyond Meat, Inc.
BYND
$14.32 (-1.85%) $0.27
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$11,468.00 (%)

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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