Analysts are generally expecting Tesla’s battery day to be a catalyst for its stock, but not everyone is expecting the shares to rise because of the event. Wedbush analyst Daniel Ives said in a report this week that he expects the battery day to boost Tesla stock alongside the company’s growth story. He raised his bull case price target for the shares to $3,500.
However, CNBC's Jim Cramer thinks the battery day will be a disappointment for Tesla stock, although he sees the pullback from this week's stock split as a buying opportunity.
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Battery day, China to boost Tesla stock
Ives maintained his $1,900 price target and Neutral rating for his base case on Tesla stock this week. He believes production and demand in China remain strong and will be better than expected. Ives again argued the case for pent-up demand for the Model 3 and recent price cuts. He expects the company to deliver 150,000 vehicles in the first year of its Chinese factory.
Ives also expects Tesla's battery day to be an upside catalyst for its stock. He expects the company to announce "game changing" battery technology at its event on Sept. 22. He added that innovations around the Gigafactory and Fremont facility are the main ingredients in the company's success.
Ives believes Tesla is getting closer to announcing a million-mile battery. He believes such a battery will be very advanced and possibly last for decades and withstand all types of weather and terrain. He also called the million-mile battery "another major milestone for the Tesla ecosystem."
In theory, the million-mile battery will support an electric vehicle for 1 million miles and improve electric vehicle technology against traditional gasoline-powered vehicles. Another possible announcement at the battery day which could drive Tesla stock is a reduction in the production costs to the key $100 per kilowatt-hour threshold.
Cramer expects Tesla stock to fall on battery day
Unlike Ives and most analysts, Cramer sees Tesla's battery day as a downside catalyst for its stock because he expects the event to disappoint investors. He expects the shares to decline during and after the event because it "might end up being some letdown."
He said investors have his "blessing" to buy Tesla stock around any weakness related to the stock split, but he advised them to "ring the register" on part of their position before the battery day, "just in case."
In the long term, he likes Tesla stock even after its $1,700 gain. He believes CEO Elon Musk "has got more magic in the tank." Despite his general bullishness on the automaker, Cramer himself wouldn't be a buyer at current levels. Last year the stock was priced at around $211, and since then, it has climbed by more than 850%.
Although Cramer does expect the battery day to be a disappointment for Tesla stock, he does see promise in the company's battery technology.
Will Tesla stock be added to the S&P 500?
One other issue Tesla investors have been thinking about lately is whether the stock will be added to the S&P 500. The company posted its fourth straight quarter of profits, which was the last milestone needed before it could be added to the index.
However, one analyst believes the committee will hold off on adding it any time soon due to the quality of the company's earnings. In a note that was picked up by multiple news outlets today, Datatrek co-founder Nicholas Colas pointed out that most of Tesla's profitability was from sales of regulatory credits to other automakers that don't comply with legal requirements for zero-emission vehicle sales.
He said the S&P committee is "in a real bind" because on paper, Tesla meets the criteria to be added to the index, but the reason it qualifies for inclusion is "purely due to regulatory arbitrage." He also pointed out that "even a modest downturn in demand" could make the automaker unprofitable again.