Tesla (TSLA.US) weakens despite the market, UBS says the company's rally is driven by "animal spirits" rather than fundamentals

Tesla (TSLA.US) opened higher on Monday but weakened against the trend, falling over 1%, and has surged nearly 40% in the month, trading at $348.37. On the news, analysts at UBS said the stock's surge since the US election was more about the market's bullish mood than any actual improvement in the company's business. The analysts, led by Joseph Spak, wrote that while policy proposals that could benefit Tesla have emerged since Donald Trump's election, they are not necessarily good news for the company. For example, Spak wrote that the elimination of the tax credit for buying electric vehicles could force Tesla to lower its prices. He also noted that while a more favorable regulatory environment under Trump could benefit artificial intelligence companies, including self-driving cars, Tesla does not yet have a self-driving taxi that could take advantage of relaxed rules. "The stock's rise has been driven mainly by animal spirits/momentum," Spak said in the report. He maintained a sell rating but raised his target price to $226 from $197.