Tesla Inc (TSLA)

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Cryptocurrency confusion sends Tesla stock below the 200-day moving average

May 13, 2021

By: Clark Schultz

CFRA Research cools on Tesla (TSLA -4.8%) on its view that the cryptocurrency dalliance has confused some investors.

Analyst Garrett Nelson: "In reality, we believe very few vehicle purchases took place using bitcoin given the significant capital gains tax liability such transactions could incur. We think TSLA's foray into cryptocurrency has both weighed on the stock's valuation and muddled the story, raising a plethora of questions regarding its capital allocation strategy, such as why the return on investment on bitcoin might outweigh that of a new vehicle factory."

It is also noted that the drop in Bitcoin today impacts the value of TSLA's $1.33B position as of the end of Q1. Bitcoin was down 13.45% at last check.

Looking ahead, Nelson and team think rising EV competition is a headwind for Tesla that needs to be factored in.

CFRA keeps a Hold rating on Tesla and lowers its target multiple on Tesla and assigns a new price target of $600 vs. $770 prior.

Technical traders are noting that Tesla slid below its 200-day moving average in today's session.