Today’s fall in Tesla’s share price (NASDAQ:TSLA) in the wake of the news that the electric-car maker is seeking cash from its suppliers throws up a buying opportunity for investors.
Or at least that is the opinion of Ben Kallo, a senior research analyst with Baird Equity Research.
Tesla shares fell nearly 4% today after a report was published in the Wall Street Journal that said the carmaker has asked some of its suppliers to refund “a portion” of the electric car company’s previous expenditures in a bid to improve its cash position and turn profitable.
Read: Tesla asks suppliers to return cash to meet its profitability goal
But Kallo dismissed the sell-off in the wake of the article as “overly negative.”
“We hesitated to comment on the WSJ article, but believe the stock reaction is overly negative and are buyers on weakness,” he wrote in a note to investors. “We think TSLA’s reported renegotiation with suppliers is an effort to increase profitability, rather than a necessity for the balance sheet."
Kallo views report of Tesla’s renegotiations with its suppliers as a sign that its production is ramping up.
“We are buyers on any weakness, although we expect bears could pile on ahead of the quarter,” he wrote. Kallo reiterated his Outperform rating on Tesla and is keeping his US$411 price target on its shares.
Tesla shares dropped 3.3% to close at US$303.20 Monday.
Contact Ellen Kelleher at ellen@proactiveinvestors.com