Tesla stock undercapitalized

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【Summary】Tesla's stock has surged this year, but financial analyst Meet Kevin believes it is still "heavily under-capitalized" by institutions. Only 35% of large-cap active funds hold TSLA, with low allocations. Kevin expects sentiment to change, leading to more institutional investors buying TSLA and potentially boosting its holdings. TSLA shares have been performing well, recently soaring 10% after a price target hike by Morgan Stanley.

FutureCar Staff Sep 12, 2023 6:22 AM PT

After experiencing a surge in its stock price this year, Tesla has caught the attention of investors. The electric vehicle pioneer has capitalized on a resurgent market, a strengthening EV industry, and robust earnings reports. However, there may be more to come for Tesla's stock. Renowned financial advisor Meet Kevin has pointed out important factors that could potentially fuel Tesla's stock even further going forward.

One of the key factors highlighted by Meet Kevin is that Tesla remains "heavily under-capitalized by institutions." He referred to a report by Bank of America, which analyzed holdings of large-cap active funds in several companies, including Tesla. According to Kevin, only 35% of these funds hold Tesla, and those that invested in the stock have relatively low allocations. In comparison, large-cap long-only funds have much higher allocations in companies like Microsoft, with 90% of funds holding the stock and overweight allocations.

Meet Kevin expects the sentiment towards Tesla among funds to change, which could lead to more institutional investors jumping on the automaker's stock and increasing their allocations. This could result in a notable increase in buying pressure for Tesla. The analyst concludes that this is a bullish sign for the company.

At the time of publication, Tesla shares were standing at $273.58 after a significant price target hike by Morgan Stanley, which caused the stock to soar 10% in the past 24 hours. The stock has gained over 6% in the week, 13.1% in the month, and more than 130% year-to-date.

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