Tesla’s $350 Billion Stock Surge Driven by ‘Animal Spirits,’ UBS Says

(Bloomberg) -- Tesla Inc.’s post-election stock surge has more to do with market exuberance than actual improvement in the fundamentals of its business, UBS Group AG analysts cautioned in a report.

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While policy proposals have emerged since President-elect Donald Trump’s victory that could favor Tesla, analysts led by Joseph Spak wrote that the changes wouldn’t be absolute positives for the company.

Removing consumer tax credits for electric-vehicle purchases, for example, could force Tesla to have to cut prices, Spak wrote. He also noted that while the regulatory environment under Trump may be more conducive to artificial intelligence ventures, including autonomous vehicles, Tesla doesn’t have a robotaxi ready to take advantage of relaxed rules.

“The rise in Tesla stock is mostly driven by animal spirits/momentum,” Spak wrote in the report. He maintained a sell rating on the shares while raising his price target to $226 from $197.

Tesla shares fell as much as 1.4% as of 10:20 a.m. Monday in New York trading. The company has added more than $350 billion in market capitalization since election day.

(Updates with intraday trading in the fifth paragraph.)

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