Broad-Market Headwinds Outweigh Tesla Stock's Upgrade

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RBC Capital Markets upgraded Tesla stock to “outperform”

The shares of Tesla Inc (NASDAQ:TSLA) are 4.1% lower ahead of the opening bell, last seen trading at $668, despite a bull note from RBC Capital Markets. The analyst in question  upgraded the electric vehicle (EV) maker to “outperform” from “sector perform,” noting the potential for a “surprise” beat for its margins in the second quarter. Despite this bullish news, TSLA, alongside much of the tech sector, is pulling back amid a broad sell-off in risk assets.

Meanwhile, RBC Capital Markets’ upgrade was accompanied by a price-target cut to $1,100 from $1,175. There’s room for covering analysts to join RBC, as the equity’s current 12-month consensus price target of $915.47 is a 37.1% premium to Friday’s close, while nine of the 20 covering brokerages considered Tesla stock a “hold” or worse coming into today.

In the options pits, traders have moved in favor of bearish bets in recent weeks. TSLA’s Schaeffer’s put/call open interest ratio (SOIR) of 1.37 stands higher than 79% of readings from the past year — indicating short-term options traders are incredibly put-biased at the moment.

While Tesla prepares for a potential stock split, its shares are struggling on the charts. Despite a 14.2% year-over-year lead, Tesla stock is down more than 34% in 2022, with failure at its 100-day moving average occurring in early May. What’s more, TSLA is coming off its sixth weekly loss in seven.