What happened
Tesla (TSLA 12.06%) stock -- the still-youthful-looking granddaddy of electric car stocks -- bounced back from a post-earnings sell-off Thursday to notch a 2.6% gain as of 10:55 a.m. ET Friday.
You can thank Wall Street for this good news -- and ARK Invest CEO Cathie Wood, too.
Image source: Getty Images.
So what
As you've probably heard by now, Tesla reported its financial results for the fourth quarter of 2021 Wednesday evening. Sales were robust -- up 65% year over year. Profits beat estimates with a stick. Profit margins surged across the board. Investors decided to sell Tesla stock regardless, keying in on warnings about supply chain difficulties and a lack of new car models to be introduced in 2022.
Many analysts took the opposite view.
Wall Street's praise wasn't quite unanimous, but, according to the latest tally from TheFly.com, at least six separate Wall Street analysts have taken the opportunity to raise their price targets on Tesla after seeing its Q4 earnings. Supply chain worries "did nothing to dent our enthusiasm," said Piper Sandler in one note. In another, Credit Suisse highlighted the company's growing profit margin strength, while in a third, Morgan Stanley predicted Tesla will become the "most cash flow generative auto company" in the world.
The latest Wall Street note arrived just this morning, with Canaccord Genuity raising its price target on Tesla shares to $1,200 -- 40% above where the stock trades today. Agreeing with its peers that "we are bullish on the continued auto gross margin expansion," reports StreetInsider.com, Canaccord said, "we would be buyers at these levels and if any pullback occurs."
Now what
Ask and ye shall receive. Despite Tesla's terrific performance in Q4, shares of the electric car giant are down 11% from their closing price last week. And as it turns out, Canaccord isn't the only Wall Street heavyweight doing some buying on this pullback.
Just yesterday, Cathie Wood revealed that her ARK tech funds purchased Tesla stock -- twice -- when the stock went on sale post-earnings. (This despite the fact that Rivian Automotive stock slid 17%, and Lucid Group crashed 27%, making them arguably even deeper bargains.)
And you know what? After seeing Tesla's number this week -- seeing just how fast its sales are still growing, and even more importantly, just how vast Tesla's profit margins are widening -- I kind of think that might have been the right call.
