Shares of World No. 2 electric vehicle (EV) stock Tesla (TSLA -1.11%) jumped 5.2% through 10 a.m. ET Tuesday, despite Bernstein cutting the stock's price target to $120 per share. Bernstein cited soft demand for Tesla's EVs as its reason for lowering the price target, reducing predicted Tesla car sales, and maintaining its sell rating.
So why is Tesla up despite this news?
Buon giorno, Tesla!
Because Italy.
As Il Sole 24 reports, the electric car maker is negotiating with the Italian government to secure an Italian production site -- not for producing electric cars. Tesla wants Italy as home base in Europe for building electric trucks and vans. From Italy's perspective, this would bring a second automotive manufacturer to the country, joining Stellantis, which currently dominates. (Three Chinese companies are also negotiating.)
But why would Tesla -- which already has a car plan in Germany -- want to build a new plant? Details aren't 100% clear, but if Tesla plans to introduce its electric Semi (the Tesla vehicle pictured in Il Sole's story) to Europe, well, those might be more expensive to ship overseas from the U.S. for sale in Europe. Setting up a local shop might make sense.
Also curious is the newspaper's mention of a Tesla "van." While Tesla has hinted at this possibility, it hasn't announced a product yet. This could be a first for Tesla, and expand the company's market of customers.
Is Tesla stock a buy?
It's too early to say this Italian news is a new reason to buy Tesla stock. What it does do is inject uncertainty into Wall Street analyst predictions such as Bernstein's -- that Tesla stock is doomed to lose one-third of its value this year. It reminds us that CEO Elon Musk can still surprise both investors and competitors.
With Tesla stock trading at prices last seen in May 2023, and a P/E ratio looking almost "normal" (for any other company) at just 40x earnings, it might be time to take another look at Tesla.
