Tesla's stock doesn't trade like it used to (TSLA)
- Tesla has shifted from a stock that trades like an emerging-growth company to one that's sensitive to more fundamental catalysts, said Craig Irwin, an analyst at Roth Capital Partners.
- Shares of the electric-car maker were under pressure Friday following the company's Model Y reveal.
- Watch Tesla trade in real-time.
Over the last year or so, Craig Irwin has taken notice of something happening incrementally with Tesla shares: they don't trade like they used to.
"We note a fundamental shift in the behavior of Tesla's stock," Irwin, an analyst at Roth Capital Partners, a Newport Beach, California-based investment-banking firm, wrote in a note to investors on Friday.
Irwin's comments came following Tesla's Model Y reveal at the company's design studio in Hawthorne, California, on Thursday evening.
"For the past several years Tesla's stock has behaved like an emerging growth company, where mgmt can invent their own milestones, meet these, and the stock would behave positively," Irwin wrote.
"Investors have now appropriately shifted focus to unit volumes, margins, and a practical assessment of the addressable market, in our view."
In other words, shares of the electric-car maker — known for trading in a volatile fashion over the last few years — appear to be moving more on fundamentals rather than the hope Tesla could meet its own ambitious, pioneering goals.
Read more: Elon Musk just unveiled Tesla's newest car, the Model Y SUV
More broadly, Irwin thinks there is "clearly a large market" for the Model 3, and likely one for the Model Y. But he said the announcement seemed to fall short of more aggressive expectations, and vehicle prices seemed to be "too high."
The cheapest version of the Model Y is set to arrive in 2021, at a starting price of $39,000. Three more expensive versions of the vehicle will start at between $47,000 and $60,000, and are scheduled to begin shipping in 2020.
This week's unveiling of the Model Y comes at a chaotic time for the company. The automaker is facing what analysts say is a demand problem, and CEO Elon Musk is battling with the Securities and Exchange Commission.
Read more: Tesla is in 'demand hell' ahead of its Model Y unveiling, Wall Street's biggest bear says
On a recent conference call with reporters, Musk said Tesla was unlikely to turn a profit in the first-quarter, a reversal from his previous expectation.
Tesla shares were under pressure on Friday, losing 5% after the Model Y launch event underwhelmed Wall Street analysts. That selling sent shares to a one-week low of $274.40. They have now fallen 29% from their August peak — reached on the day of CEO Elon Musk's infamous "funding secured" tweet.
Irwin has a "neutral" rating and a 12-month price target of $270 — about 2% below where shares were trading on Friday.
Read more Tesla coverage from Markets Insider and Business Insider:
- Wall Street is warning Tesla's new SUV could 'cannibalize' its Model 3. Here's what analysts are saying about the Model Y.
- Tesla's bull case stands on shaky ground
- Tesla sinks after analysts were underwhelmed by the long-awaited Model Y unveiling
- Tesla just unveiled its Model Y — here are the best features of the $39,000 SUV