Tesla shares bounce back following steep five-day decline

A steady stream of positive news -- including an upgrade from a Wall Street analyst, a rally in the cryptocurrency Bitcoin and a broader turn in sentiment toward high-multiple technology stocks -- are luring investors back to electric-vehicle makers, and Tesla.

Tesla Inc. shares rebounded on Tuesday after a five-day losing streak wiped out about $149 billion from the company’s valuation.

Shares of the Elon Musk-led company jumped more than 8% at the open, after falling 22% in the past five sessions. (Reuters file photo)

A steady stream of positive news -- including an upgrade from a Wall Street analyst, a rally in the cryptocurrency Bitcoin and a broader turn in sentiment toward high-multiple technology stocks -- are luring investors back to electric-vehicle makers, and Tesla.

Shares of the Elon Musk-led company jumped more than 8% at the open, after falling 22% in the past five sessions. Precipitous drops, however, are nothing new for Tesla investors. The stock has seen three sharp selloffs of more than 30% in a span of about a month since the beginning of 2020.

While the market has recently soured on expensive growth stocks like Tesla amid a rise in Treasury yields, shares of the EV maker have also been hit hard as a slew of legacy carmakers this year announced their plans to aggressively push into the electrification trend.

Yet, a steep rout in the stock can be an opportunity to buy the shares. On Tuesday, New Street Research analyst Pierre Ferragu upgraded Tesla to buy from the equivalent of a hold, saying the company has two years of earnings momentum ahead and its demand outlook is stronger than supply could ever be.

“With such earnings revision, we would expect the stock to remain in the upper end of the 50-100x range, similar to where Amazon traded on for almost a decade, and below today’s multiple of 100x,” Ferragu said.