Retirees, state legislators, investors
Musk’s involvement in politics could have upsides as well as downsides, noted Seth Goldstein, a Chicago-based equity strategist with Morningstar, whose coverage includes electric vehicles.
For example, Musk's proximity to power as Trump's most prominent adviser could leave him well positioned to hasten the establishment of federal regulatory frameworks for businesses Tesla is pioneering now such as robotaxis, Goldstein said.
The downside, of course, would be if Musk’s political activities turn away consumers, said Goldstein, noting that while U.S. data on that score remain unclear, European data is a bit more concerning at present.
The portfolio manager who declined to be named said, “I don't know if it's going to have long-term effects, because at the end of the day, the (Tesla) product itself is still very competitive,” with other exciting, innovative products in the pipeline. Politics could prove very disruptive in the short term but longer-term consumers are likely to “forget all of this stuff,” he predicted.
Patricia Fahy, Democratic state senator for New York’s 46th district, said she and her colleagues are working to make sure people don't forget.
Fahy led 22 fellow Senate Democrats on March 11 in calling on New York Comptroller Thomas P. DiNapoli to start unloading the state pension fund’s holdings of Tesla shares. In an interview, Fahy said the push to get Tesla out of the New York State Common Retirement Fund's $274.7 billion portfolio would likely be a “multiyear effort. It’s not something that can happen overnight,” she said.
Donnisha Lugo, a professor at Sacramento-based Cosumnes River College, during the public comments portion of a California State Teachers' Retirement System board meeting in March, said divesting from Tesla will remain an issue as long as the $352.7 billion pension fund owns the company’s shares.
“If you have already decided to divest, we thank you, and if not, we will be back,” she said.
All of which leaves investors with mixed feelings when it comes to just how much value Tesla shares are offering as they changed hands at roughly $236 a share as of the March 19 close, up 4.7% from Tuesday's close but down 41.6% from the end of 2024.
Some insist Tesla’s share still aren’t a bargain.
“Buy-the-dips investors are nowhere in sight for a stock that has nosedived so fast,” CREATE-Research’s Rajan said, adding that the share price will have to fall more before it becomes “a value stock.”
The portfolio manager who declined to be named noted that the sharp sell-off over the past month or two only brings Tesla’s stock price back to where it was in late October, and before that the stock had remained in a range for much of the prior two or three years.
The retreat of the past few months pretty much amounted to taking “a lot of froth” out of the stock, but it could be closer to the summer, when Tesla’s cyber-cab business is due to be launched, when excitement builds for the stock, he said.
Morningstar’s Goldstein said Tesla's stock, with a price target now of $250, would have to drop below $200 before he would switch his recommendation to a “buy” from its current “hold.”
Adding Tesla shares
But others already see enough reasons to begin adding exposures to Tesla now.
“Politics aside,” there are a lot of potential catalysts coming ,said Nancy Tengler, CEO and CIO of Brentwood, Tenn., $1.4 billion equity boutique Laffer Tengler Investments. Laffer Tengler added to its holdings of Tesla on March 10, as the stock plunged 15% to $222.15.
The company's fans say the market's focus on any political fallout for Tesla's electric vehicle sales obscures what they see as exciting growth prospects for newer business segments the company is investing heavily in now.
At present, "volumes are slowing in the car business but we aren't buying this for the electric vehicle part of the business," said Tengler. "We're buying it for the full self-driving, which is really artificial intelligence, and we're buying it for the mega utility-grade batteries that will allow green energy to be stored and utilized in periods when there is no wind or sun," Tengler said.
Adam Jonas, an equity analyst with Morgan Stanley, made a similar point in a March 14 research note on Tesla, recommending an overweight for the stock, with a price target of $430 a share.
"We believe the challenges facing Tesla's current business are widely reported and well known, while the opportunities in the future business are potentially greatly underestimated," he wrote. Jonas couldn't be reached for further comment.
Tengler said "we added to it recently (and) we'll be wondering why we didn't buy more when it's at $500 per share in not a very long time."
