A CleanTechnica reader and good friend of the site highlighted something interesting for us a week ago. Returning to news from the end of 2019, this person noted that the 3 banks most funding fossil fuel development recommended selling Tesla [NASDAQ:TSLA] stock before its epic run over the past several months. Overall, 5 of the top 10 banks funding fossil fuel growth had a “Sell” rating on TSLA.
In case you haven’t been following the TSLA stock price when from $334.87 on the first trading day of December 2019 to $1513.07 at market close yesterday. That’s an increase of ~4½ times in about 8 months. (Full disclosure: I own shares of TSLA.)
The leading fossil fuel banks all told investors to sell $TSLA before its epic run💩
— Not_an_Analyst (@facts_tesla) July 17, 2020
Clearly, the same people who work on funding for fossil fuel development are not the ones analyzing Tesla and deciding whether or not to buy/sell Tesla stock.
Naturally, it is common to presume there might be some funny business going on from the top down — executives pushing on analysts to be anti-cleantech, anti-Tesla, for example. I don’t lean toward such theories myself, since I think such firms have clear lines separating different parts of the business aimed at maximizing the effectiveness and reputation of the different arms. So, either there’s less direct corruption in these institutions than many people presume or there’s more corruption than I presume. Either way, though, it’s a bit of a shocking revelation to see how that the 3 financial institutions that fund most fossil fuel development recommended selling TSLA right before an amazing increase in value that is basically the stock story of the year so far this year.
JPMorgan Chase [NYSE:JPM] was the leading funder of fossil fuel development in recent years when the report from The Guardian came out late last year, funding them to the tune of $75.6 billion over a few years, $22.8 billion ahead of #2 funder Citi’s $53.8 billion in funding.
When I first covered this topic in October 2019, before the huge stock run, JPMorgan Chase had a target price of about $200 for the stock and an “underweight” rating. The latest comment from JPMorgan Chase’s Tesla analyst, which we reported in our Tesla analyst analysis before the Q2 Tesla shareholder letter came out on Wednesday, July 22, was “It is startling to us that TSLA shares are again trading at $800” — startling because it was high above their price target, which was at a mere $295. Naturally, their recommendation was still to sell the stock.
The correlation between heavily funding fossil fuels and being bearish on TSLA does make one wonder about the corporate culture at these institutions, the assumptions they employ rather broadly, and simply the vision, focus, and analytical skills of their professional staff.
Furthermore, how much does one thing influence another thing and then another thing in the corporate world of dominoes? Also, as I wrote in October 2019:
“What is clear, however, is that JPMorgan Chase in more ways than one is bullish on dirty energy, not clean energy and electric cars. Perhaps give it some consideration when thinking about where to bank (really) and which credit cards to use.” (Full disclosure: CleanTechnica banks at Fifth Third Bank [NASDAQ:FITB] because it is 100% solar powered, making it the 10th largest corporate buyer of solar power in the USA, and I own shares in the company partly for the same reason.)
Concerning #2 fossil funder Citi, Citigroup’s top analyst for Tesla, Itay Michaeli, had a price target of $450 going into Tesla’s earnings report yesterday and retained a “Sell” rating on the stock. Based on previous ratings, Michaeli’s return on TSLA would have been -238.5% — if anyone had chosen to religiously follow his recommendations.
Aside from JPMorgan Chase and Citigroup, the third biggest funder of fossil fuels was Bank of America. Bank of America Merrill Lynch’s John Murphy had a price target of $500 on TSLA and a rating of “Underperform” going into the shareholder letter yesterday.
To be fair, few TSLA analysts have been recommending buying TSLA, even back a few months ago when the price was much lower. JPMorgan Chase, Citigroup, and Bank of America Merrill Lynch stand out just because they’re the biggest of the big.
Across the top 10 fossil fuel funders, 5 of them had “Sell” ratings on TSLA before this enormous increase in stock price.
- U.S. Banks Continue To Fund Dirty Energy
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