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New data out from artificial intelligence specialist Irithmics on widely followed stock Tesla (NASDAQ:TSLA) shows a marked difference of opinion when it comes to professional investors and money managers.

Irithmics compiles its analysis using machine learning and the behaviour of thousands of institutional investors globally. It tracks the posture and behaviour of bigger investors in Tesla stock like fund managers and family offices.

Tactical traders still leaning into Tesla – slightly

The data shows that short term, tactical investors have a positive bias towards Tesla, but it is only marginal. The stock is followed closely by institutions and they are primed for further positive news from the company. However, overall appetite is now actually quite small.

Here at The Armchair Trader we can see that lack of appetite easily translating into further selling of the stock.

Perhaps more worrying for Tesla investors is the position of longer term, buy and hold investors, where we see a distinct negative bias. Like traders, long term investors have little appetite for Tesla stock at the moment. While Tesla remains very popular with retail traders, the bigger money seems to have had its fill already.

Tesla stock trying to recover some momentum

This makes for interesting reading as the Tesla stock price has dropped considerably since January, from close to $900 to getting close to the $600 mark. For example, Tesla stock hit $563 on 19 May. This is still well off the 52 week low of $329. We have seen some cautious buying over the summer months, with the shares gradually trading up, but it has been slow going.

Tesla stock was trading at $731 at time of writing, which looks respectable, but bear in mind we are currently still in the slow season where volumes are well down. The big question will see whether that lack of institutional appetite Irithmics had identified translates into a lack of support for the stock price at current levels. We think it might.

Tesla’s emerging markets strategy has been drawing some big questions: GLJ Research said that the company was likely to miss its Chinese vehicle sales estimates. There has been some latent excitement around Tesla’s current search for suppliers in India, opening up the possibility of a new and lucrative market for the company.

Wall Street remains bullish on Tesla

Analysts are still looking quite bullish on the stock. Nearly half of the 45 analysts covering it still have it on a buy, with only nine with sell recommendations. The consensus target price is currently $679 which is below current trading levels. Cowen notably came out with a $562 target price last week, and DZ Bank has Tesla at $790. Morgan Stanley is sounding very adventurous with a $900 target and really needs to take a long hard look at the Irithmics output.

Our feel at the moment is that the support is simply not there right now even for $700 on Tesla. We are going to emerge shortly from the summer season, volumes will pick up, and we will get a better steer from the heavy hitters on the stock. We aren’t expecting too much from Tesla shares at the moment. Tactical trading behaviour could take it higher in the short term (e.g. to $800), but a company of this size will need more institutional support behind it to keep the stock up there for long.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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