Tesla Stock Continues Winning Streak, Boosted by Strong Deliveries and Energy Storage Segment
Tesla stock (TSLA) is on track to extend its longest winning streak in over a year, rising as much as 1.1% in early trading on Friday. The stock has experienced a remarkable 30% rally over the past seven sessions and a nearly 40% increase in the last month. These gains are significant as they bring the stock closer to breaking even for 2024 after falling by as much as 40% year-to-date in mid-April. In contrast, the S&P 500 has only risen by a modest 3.5% over the same period.
One of the key factors driving Tesla’s extended rally is its strong quarterly deliveries report. The company beat expectations, demonstrating its ability to meet demand and solidifying its position as a market leader. Additionally, Tesla’s energy storage business has emerged as a significant growth driver, impressing investors and analysts alike. Morgan Stanley’s Adam Jonas emphasized this aspect in a recent note, stating that Tesla’s storage beat showcases its diversified strengths beyond being just an auto company.
Furthermore, positive news came from China, where Tesla cars were included in the provincial government purchase list of Jiangsu province. This means that government workers in that region can purchase Tesla’s Model Y as a service car. This inclusion is particularly notable considering the intense competition Tesla faces from domestic Chinese electric vehicle manufacturers. It indicates that Tesla is making progress in the world’s largest automotive market.
Despite these positive developments, some challenges remain for Tesla. The company has faced waning demand for electric vehicles in the United States and has had to cut prices to boost sales. In addition, CEO Elon Musk acknowledged during Tesla’s shareholder meeting last month that near-term demand and sales may continue to struggle amidst an industry-wide transitionary period.
Barclays senior equity research analyst Dan Levy echoed this sentiment, stating that Tesla still faces risks of further price cuts and questions about its fundamentals. He referred to the current situation as an “EV winter on demand.” Levy has assigned an Equal Weight rating to Tesla’s stock and set a price target of $180.
While near-term challenges persist, analysts and investors are eagerly awaiting Tesla’s upcoming quarterly results on July 23 and the highly anticipated robotaxi event on August 8. Wedbush managing director Dan Ives believes that the market will recognize Tesla as the most undervalued artificial intelligence (AI) play. He raised his price target to $300 and mentioned the potential for a bull case scenario of $400 by 2025. Ives emphasized that the robotaxi event will lay the foundation for full self-driving capabilities and an autonomous future for Tesla.
Overall, Tesla’s stock has successfully recovered from its year-to-date losses, experiencing a remarkable increase of over 70% since its lows in late-April. This recent rally, driven by strong deliveries, a growing energy storage segment, and anticipation for upcoming events, showcases Tesla’s resilience and ability to maintain its market-leading position in the electric vehicle industry.