The swagger is back in Tesla’s step.
A few months ago, Elon Musk’s company was the center of all jokes on Wall Street, a growth stock that is not growing to quote Wells Fargo. Pundits began to question why anyone still included it among the high-flying Magnificent Seven after Tesla trailed all 499 other stocks in the benchmark S&P index—even scandal-ridden Boeing.
That’s not the case anymore. At the start of the second half, Tesla has fully recovered its current losses after adding $150 billion in market value in just three days this week.
$TSLA investors right now pic.twitter.com/yqa3efRxkc
— Teslaconomics (@Teslaconomics) July 3, 2024
“The worst is in the rear view mirror for Tesla as we believe the story of EV demand is starting to return to the technology hard worker,” Wedbush Securities technology analyst Dan Ives wrote on Wednesday, raising his price target to $300 from $275 and affirming “exceed” rating.
Now Musk is back to his old self, trading one anti-rational growth goal for another while warning any short seller who gets in his way will be “destroyed” – including Bill Gates.
After rallying around $180 for the better part of two months, bulls see further room for gains after the stock broke its 200-day moving average under heavy trading volume and now looks like it may break a three-year downtrend.
Tesla $TSLA you did it! The 2.5 year downtrend has finally been broken 🥳🍾🫂 pic.twitter.com/9kEQejJoNb
– Barchart (@Barchart) July 3, 2024
When another popular pro-Tesla account reminded the fan community late last month of ARK Invest’s Cathie Wood’s 2019 comments about chart technology that “the longer the base, the bigger the breakout,” Musk quickly responded: “True.”
Q2 deliveries beat expectations
This belief that the stock has bottomed out and is poised to continue its rally in the coming months is reflected in some of the fundamentals emerging now.
Tuesday’s announcement of second-quarter auto deliveries, for example, was a stark contrast to first-quarter figures that badly missed even the worst forecasts. After the expectation has been reduced in recent weeks, Tesla was finally able to draw a line under the issue by hitting consensus with a moderate decrease in car sales.
Tesla’s second quarter sales estimates.
About those ratings… with @umbono $TSLA pic.twitter.com/9TmW6xCpf6— Liam Denning (@liamdenning) July 2, 2024
Big growth in its profitable energy storage business also helped support the argument that it’s not just an EV company, as shipments more than doubled the previous quarter’s record.
Many analysts and investors have until recently argued that they need to see the end of downward revisions to earnings estimates before sentiment improves further.
Following Tuesday’s surprise delivery, bulls like Ives—who described the Q1 numbers as a “nightmare” and an “unmitigated disaster”—now believe the company has renewed the market’s faith in its growth story.
“This was a great performance from Tesla and Musk in 2Q as the Street expects a clear miss this quarter as EV demand remains weak globally, but Tesla delivered strong numbers at an important time for investors,” he continued.
With painfully high interest rates expected to drop later this year, the August 8 unveiling of the CyberCab robot just around the corner, and Tesla’s new level scheduled to go into effect about six months from now, the stock may be poised for another gain. It may reclaim its place in the Magnificent Seven festival.
FINALLY IT’S OUR TURN $TSLA pic.twitter.com/XMhF3JbZ1V
— TheSonOfWalkley (@TheSonOfWalkley) July 3, 2024
