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Is TSLA stock a buy amid analyst downgrade and buyback request?


  • You’re here (TSLA) faced a lot of downside pressure this week.
  • TSLA stock has fallen over 16% in the past five days and is now down 46% in 2022.
  • Investors should look to the long term and take advantage of the latest drop in TSLA stock prices.

Source: Michael Vi / Shutterstock.com

Telsa (NASDAQ:TSLA) investors are used to the company making headlines. However, over the past six weeks, the situation has been particularly chaotic, sparked by Tesla CEO Elon Musk’s parallel attempt to try and buy up social media platforms.

Things got really interesting this week. Wedbush analyst Dan Ives – a famous Tesla Bull – cut his price target from $1,400 to $1,000. Billionaire Leo Koguan claims to be Tesla’s third largest individual shareholder. He called on the company to use its free cash flow to buy back $15 billion worth of Tesla stock over the next two years. The TSLA stock was also removed from the S&P500 ESG index. These are pretty big headlines.

Add to that general market volatility due to economic factors and Russia’s invasion of Ukraine, and you have TSLA shares trading at prices not seen since last August. If you’re okay with the potential for additional short-term volatility, buying TSLA stock at this price is a solid move to build your long-term growth portfolio.

Teleprinter Company Current price
TSLA You’re here $640.25

The current panic focuses on short-term concerns

Why would you want to buy Tesla stocks when they’re in such a bad place?

The key to the current price decline lies in economic headwinds in 2022, including a resurgence of Covid-19 in China. The stock market in general is affected by economic concerns. Investors worry about inflation, rising interest rates and the possibility of a recession. All of those things would be a challenge for Tesla, of course. Keep in mind that the company has already taken some big steps in response, including a series of price hikes. This has done nothing to reduce demand for its electric vehicles.

If the situation degenerates into a recession, Tesla could see its sales affected. However, wealthy Tesla buyers are less likely to feel the effects of a recession. And recessions don’t last forever.

The China problem – the reason for Wedbush’s downgrade – is bigger, but will be short-lived. In a nutshell, Wedbush’s Dan Ives is concerned about Tesla’s Shanghai gigafactory closures due to Covid-19 shutdowns. This reduced production at the factory in April and the shutdowns have impacted demand in China.

However, this is a short-term issue and the plant is now operational again. The aftermath may cause additional volatility for TSLA stocks, but it won’t last long. So don’t worry too much about how Tesla stock is doing right now.

Tesla stock growth looks solid

Tesla hums. It sets all-time electric vehicle (EV) delivery records in 2022. Its Texas and Berlin Gigafactories are open, dramatically increasing its production capacity. The Cybertruck arrives. Earlier this week, Tesla began taking deposits on its all-electric tractor-trailer.

Tesla is the leader in a global electric vehicle market expected to be worth nearly $824 billion in 2030. Considering $163 billion worth of electric vehicles were sold in 2020 – many of them by Tesla – the long-term growth potential of TSLA stock is obvious.

Should you buy TSLA stock?

TSLA’s volatility and overall downward trajectory have investment analysts looking a little more cautiously at Tesla stock. However, the overall picture remains largely positive, despite moves such as Wedbush reducing its price target.

Recording with CNN Business, all 42 investment analysts surveyed rated TSLA stock as a consensus “buy.” Their median price target of $1,108 offers around 70% upside.

TSLA shares also earn a coveted “A” rating in portfolio binder. If you can handle the likely continued near-term volatility, buying Tesla stock now will add a high-performing, long-term growth stock to your portfolio at a bargain price.

As of the date of publication, neither Louis Navellier nor the member of the InvestorPlace research staff principally responsible for this article holds (directly or indirectly) any position in the securities mentioned in this article.

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