Tesla stock is ‘heavily under-capitalized,’ says financial analyst

Tesla stock is ‘heavily under-capitalized,’ says financial analyst

As capital markets rebounded from their 2022 bottoms, Tesla‘s (NASDAQ: TSLA) stock has experienced a particularly impressive surge this year, with its share price more than doubling since January 1, 2023.

As the electric vehicle (EV) pioneer capitalizes on a resurgent market, a strengthening EV industry, and robust earnings reports, investors have reaped the rewards.

Yet, the story may not end here. On September 11, renowned financial advisor, Meet Kevin, pointed to important factors that could potentially fuel Tesla’s stock even further going forward.

Most notably, the entrepreneur reiterated his previous claims that TSLA remains “heavily under-capitalized by institutions.”

What does this mean?

In his Monday September 11 on X.com (formerly Twitter), Kevin referred to an earlier report by Bank of America, in which the lender’s researchers analyzed holdings of large-cap active funds in ‘The Magnificent Seven’ companies, which include Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOGL), Nvidia (NASDAQ: NVDA), Meta Platforms (NASDAQ: META), and Tesla.

According to Kevin, only 35% of these funds hold TSLA, and those that invested in the stock have relatively low allocations.

For comparison, 90% of large-cap long-only funds have MSFT holdings, which are overweight by 20-30%, the licensed financial advisor noted.

Large-cap funds’ holdings in The Magnificent Seven companies. Source: Meet Kevin

Approximately 50-75% of funds are invested in AMZN, GOOGL, NVDA, and META, with their respective weights in the portfolio surpassing the target allocation by a margin ranging from 20% to 60%.

“Basically, $TSLA has the WORST of both: low amount of funds holding it [and] low allocation within those who do.”

– Meet Kevin highlighted.

More institutional investors to buy TSLA and boost holdings

The analyst expects the funds’ sentiment toward TSLA to change, and when it does, it means more institutional investors will be jumping on the automaker’s stock and may boost their allocations.

Ultimately, if his expectations come to fruition, TSLA could witness a notable increase in buying pressure.

“Bottom line/English: Very bullish. Good job, @elonmusk, and team @Tesla!” the expert concluded.

Meanwhile, TSLA shares were standing at $273.58 at the time of publication after soaring 10% in the past 24 hours on Morgan Stanley’s substantial price target hike.

The EV stock gained over 6% on the week, 13.1% across the month, and more than 130% year-to-date.

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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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