Tesla’s stock surged about 4% in mid-afternoon trading on Tuesday, marking its 10th consecutive day of gains. The rally has erased all year-to-date losses, with shares now up approximately 5% since the start of 2024 and 75% higher since reaching 52-week lows in April.
Analysts say the stock’s rise is due to stronger-than-expected second-quarter vehicle production and delivery numbers, along with growing momentum in Tesla’s artificial intelligence ventures.
“All of a sudden, the market is valuing the growth potential for Tesla,” said Seth Goldstein, equity strategist at Morningstar, in an interview with Yahoo Finance. “Q1 deliveries surprised to the downside so the market was assuming a lower growth rate, and that’s why we’ve seen the large rally.”
Tesla is scheduled to report its next quarterly results on July 23 after market close. The company has hinted at the development of more affordable electric vehicles (EVs), viewed by investors as a critical growth driver.
However, Goldstein emphasized the need for a “solid, concrete timeline” for the rollout of these vehicles, which could happen as soon as 2025. “We need to see that being met or pushed up earlier so that [Wall Street] can assume Tesla will see a second wave of deliveries growth starting in 2026,” he added.
“As long as that narrative remains intact, I think that the stock will be okay. But if that’s pushed out or if management sounds more uncertain that that’s going to happen, then I think we could see the stock falter.”
Investors are also keenly awaiting the unveiling of Tesla’s much-anticipated robotaxi on August 8, which represents another potential growth avenue.
Earlier in the year, Tesla’s stock fell sharply following disappointing fourth-quarter earnings and a 9% year-over-year drop in first-quarter vehicle deliveries. The company responded by cutting over 10% of its workforce.
Increased competition from Chinese EV makers such as Li Auto (LI), Nio (NIO), and XPeng (XPEV) has intensified a price war, compelling Tesla to make aggressive price cuts.
Short sellers, who have targeted Tesla extensively, faced significant losses due to the recent stock rally. “Short sellers have been up and down in this name over the past couple years. It was the number one short in the market. Now it’s number four behind Nvidia, Apple, and Microsoft,” noted Ihor Dusaniwsky of S3 Partners to Yahoo Finance. “But this is like the OG short. Everyone is still in it.”
Earlier this month, Tesla CEO Elon Musk again said those shorting the company’s stock would be “obliterated.”
“Once Tesla fully solves autonomy and has Optimus in volume production, anyone still holding a short position will be obliterated. Even Gates,” said Musk, referring to the Microsoft co-founder that apparently still has a short position against Tesla.
😂
Once Tesla fully solves autonomy and has Optimus in volume production, anyone still holding a short position will be obliterated. Even Gates.
— Elon Musk (@elonmusk) July 2, 2024
As of writing, Tesla is up 3.5%, trading at $261 per share, up 18.69% in the past week and 48% in the past month. Hang on folks, we’re not done yet.