![](https://investorshub.advfn.com/uicon/182259.png?cb=1535531343)
Wednesday, March 09, 2022 9:42:14 AM
9:19 am ET March 9, 2022 (Dow Jones) Print
Al Root
Anyone bearish on Tesla stock should consider this: A lot of portfolio managers are underweight Tesla stock. Correcting that situation could generate buying and drive shares higher.
Tuesday, Wells Fargo equity strategist Christopher Harvey suggested in a research report that it was time to rethink the underweighting of Tesla, noting that so far in 2022, shunning the stock has worked. Inflation, rising interest rates, and the war in Ukraine have all damped investor enthusiasm for high-growth stocks, including Tesla.
The impact of the factors is easy to see. The Russell 1000 Value Index has outperformed the Russell 1000 Growth Index by more than 12 percentage points so far in 2022. Tesla stock, for its part, is down about 21%, while the S&P 500 and Dow Jones Industrial Average have both lost 10%.
But now, the conflict in Ukraine has driven up oil prices. "The Europeans need to reduce reliance on Russian energy. This transition will be neither quick nor easy one, likely keeping a bid to oil prices," wrote the analyst. "Tesla may be a winner in all of this."
There are two ways that can help Tesla stock. For starters, it might slow the economy, easing pressure on the Federal Reserve to raise interest rates. Stable rates would remove one overhang for growth stocks.
Next, Harvey believes, high oil prices can persist. That is good for electric vehicle adoption. High oil prices lead to high gasoline prices, widening the gap between the cost of operating an electric vehicle, the kind Tesla makes, and a traditional car.
Potential positives combined with portfolio weightings can become a problem for bears. "We remind investors [Tesla] is a major underweight across many institutional accounts," Harvey wrote. "It is beginning to feel like the Apple (AAPL) underweight we started highlighting 2 [to] 3 years ago."
Apple stock was roughly $50 when he highlighted that portfolio managers were holding less of the stock than its weighting in the indexes used to track their performance. The stock was trading for about 14 times estimated per-share earnings. Now Apple stock is at almost $160 and trades for more than 25 times estimated 2022 earnings.
There is no guarantee, of course, that portfolio managers will suddenly flock back to Tesla stock while fighting continues in Europe. And Tesla stock is more expensive than Apple. Tesla shares trade for about 78 times estimated 2022 earnings.
Still, what Harvey is pointing out about Tesla is worth considering. And Tesla shares should find a floor somewhere. Coming into Wednesday trading, shares were off more than 33% from their November 52-week high of more than $1,243 a share.
Tesla stock was up 2.5% in premarket trading Wednesday, though a wholesale re-evaluation of portfolio weightings isn't the most likely cause. The market was set to open higher. S&P and Dow futures were both up more than 1.4%.
Write to Al Root at allen.root@dowjones.com
(END) Dow Jones Newswires
March 09, 2022 09:19 ET (14:19 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.
Recent TSLA News
- Intuitive Machines Soars 18% on NASA Contract, Intel Considers Splitting Operations, Dell Reassesses Selling SecureWorks • IH Market News • 08/30/2024 10:00:08 AM
- Big Lots Falls 27%, Considers Bankruptcy; DraftKings Acquires Simplebet, Berkshire Hits $1 Trillion • IH Market News • 08/29/2024 10:06:50 AM
- High Volatility Expected in Nvidia Report, Ambarella Soars 20%, Hertz Strengthens Board, Apple Cuts Jobs • IH Market News • 08/28/2024 09:50:36 AM
- Apple Names New CFO, Sony Hikes PS5 Price in Japan, Santander Launches Share Buyback • IH Market News • 08/27/2024 09:35:22 AM
- Cruise and Uber Join Forces for Robotaxis, Alibaba Shifts Primary Listing to Hong Kong, Altria Hikes Dividend 4.1% • IH Market News • 08/23/2024 12:20:26 PM
- Schwab and Snowflake Retreat in Premarket, WeRide Postpones IPO, Halliburton Cyberattack, McDonald’s Instagram Hack • IH Market News • 08/22/2024 09:37:42 AM
- Walmart Sells JD.com Stake, Microchip Suffers Cyberattack, Union Pacific Warns of Strike in Canada, and Latest News • IH Market News • 08/21/2024 12:12:11 PM
- Berkshire Reduces Stake in BofA, Hawaiian Airlines Soars 10%, Paramount Receives $4.3B Offer, and More • IH Market News • 08/20/2024 09:56:02 AM
- FuboTV Soars 12% After Venu Sports Block, Goldman Sachs Lowers U.S. Recession Odds, BHP Ends Chile Strike • IH Market News • 08/19/2024 09:28:19 AM
- Deutsche Bank Faces Shareholder Backlash, Bank of America Sponsors 2026 World Cup, Quanterix CEO Buys More Shares • IH Market News • 08/16/2024 10:03:21 AM
- Google Mandated to Modify Play Store, Apple Innovates, Victoria’s Secret Hires CEO, Mars Buys Kellanova • IH Market News • 08/15/2024 10:05:46 AM
- Google Forced to Modify Play Store, Apple Innovates, Victoria’s Secret Hires CEO, Mars Buys Kellanova • IH Market News • 08/15/2024 10:05:46 AM
- UBS Beats Earnings Forecasts, Intel Divests Arm Holdings, Flutter Surges 9% in Premarket Trading, and More • IH Market News • 08/14/2024 09:56:35 AM
- Dell Stock Slide Offers Opportunities; Trump and Musk hold talks on X; GM Restructures China Operations, and More • IH Market News • 08/13/2024 09:43:49 AM
- Starbucks Rises 3%; Disney Unveils New Films and Expansions; Uber CEO Questions Tesla Robotaxi Viability, and More • IH Market News • 08/12/2024 09:46:16 AM
- Joby Aviation Seeks Australian Certification, Arcadium Lithium Projects Suspended Due to Oversupply, and More • IH Market News • 08/07/2024 09:47:32 AM
- Sunrun and Tesla Partner to Support Texas Power Grid Using Residential Solar-Plus-Battery Systems • GlobeNewswire Inc. • 08/06/2024 08:01:00 PM
- Google Faces Antitrust Ruling; SunPower Files for Bankruptcy and Business Sale – Latest Business News • IH Market News • 08/06/2024 09:44:42 AM
- Nvidia AI Chip Delays, Mars Eyes Kellanova Acquisition, Berkshire Hathaway’s Cash Surge to $277 Billion • IH Market News • 08/05/2024 09:43:55 AM
- ASML Rises 7% on Export Waiver; Intel Plans Layoffs, HSBC $3B Buyback Announced, and More • IH Market News • 07/31/2024 09:55:50 AM
- Toyota Reports Another Global Production Decline, Delta Sues CrowdStrike, Meta Launches AI Studio for Custom Chatbots • IH Market News • 07/30/2024 10:00:51 AM
- Apple Delays AI Features, Abbott Shares Plunge 7% After $495M Fine, Philips Soars 10% • IH Market News • 07/29/2024 10:24:10 AM
- Alphabet Unveils AlphaProof and AlphaGeometry 2; OpenAI Tests SearchGPT; Apple Loses Market Share in China • IH Market News • 07/26/2024 10:07:41 AM
- Stocks Fail To Hold Early Gains; Dow Settles Higher, S&P And Nasdaq Close Weak • IH Market News • 07/25/2024 08:39:40 PM
- U.S. Stocks May See Further Downside In Early Trading • IH Market News • 07/25/2024 01:05:29 PM
Element79 Gold Corp Appoints Warren Levy to Board of Directors • ELMGF • Aug 28, 2024 9:51 AM
Integrated Ventures Announces Strategic Entry Into Health & Wellness Industry with Focus on GLP-1 Products • INTV • Aug 28, 2024 8:30 AM
ELEMENT79 ANNOUNCES UPLISTING TO OTCQB VENTURE MARKET • ELMGF • Aug 26, 2024 10:03 AM
North Bay Resources Announces Gold Assays up to 2.2 Ounces per Ton, Fran Gold Project, British Columbia • NBRI • Aug 26, 2024 10:00 AM
PickleJar Unveils Latest Venue Managed Services Innovations in Upcoming Webinar • PKLE • Aug 23, 2024 1:11 PM
Element79 Gold Corp Provides Update on Nevada Portfolio • ELMGF • Aug 23, 2024 8:00 AM