As Analysts Divided on Tesla's Future Trajectory, Can It Achieve a 10-Day Winning Streak?

Black suggested Wall Street analysts might revise their earnings estimates and price targets following Tesla's second-quarter earnings report, which is expected to show higher-than-anticipated auto gross margins and adjusted EPS. He also indicated a potential reversal in Tesla's 18-month trend of negative earnings revisions, as the company favors low-interest-rate loans over price cuts to drive EV volumes.

Despite this bullish sentiment, some analysts remain skeptical. Gordon Johnson of GLJ Research expressed a bearish outlook, citing declining margins and slower car sales growth,predicting Tesla's stock could fall below $30 per share. Conversely, Wedbush analyst Dan Ives raised Tesla's price target to $300, with a bullish case of $400, driven by the company's AI potential, which he believes could make Tesla worth over $1 trillion. "Tesla is the most undervalued AI play in the market in our view," wrote Ives in a recent report. He is looking forward to Tesla's Aug. 8 robotaxi event, where the EV maker will detail gains made in teaching its cars to drive themselves. An impressive event could drive the stock even higher, he believes.

Hedge funds increased short bets against Tesla just before the company's strong vehicle delivery report triggered a significant share-price rally. By the end of June, 18% of over 500 hedge funds tracked by Hazeltree had short positions on Tesla, up from under 15% in March. These bets now risk losses as Tesla's share price jumped 40% following better-than-expected second-quarter delivery figures. Morningstar's Seth Goldstein expects Tesla's profit margins to improve and forecasts a return to profit growth next year, emphasizing the importance of Tesla's strategy for affordable EVs.

Some hedge fund managers, like Fabio Pecce of Ambienta, are hesitant to invest in Tesla due to uncertainties about the company's management and corporate governance. However, Pecce believes a Trump win could benefit Tesla due to anticipated tariffs on Chinese competitors. A Bloomberg survey found that nearly two-thirds of respondents plan to avoid the EV sector, with 60% expecting further declines in the S&P Global Clean Energy NR USD, which has already dropped 13% this year after a 20% slide in 2023.