What's Next as Tesla Jumps 17% in Two Days and Crosses $230

Moomoo News Global joined discussion · Jul 3 18:27

$Tesla (TSLA.US)$ 's latest quarterly delivery data, released on Tuesday, brought a surprising delight to investors. The Q2 deliveries, which exceeded market expectations, and the very robust energy storage performance, ignited bullish sentiment, driving Tesla up over 10% to close at $231.26 on Tuesday. The stock has accumulated nearly 17% gains in the first two trading days of July. Technically,Tesla broke through the 200-day moving average for the first time in six months, which is another positive factor for the stock's trend. Compared with three weeks ago, market sentiment has reversed, and Tesla has rebounded strongly by 38% from its June low of $167.41.

What's Next as Tesla Jumps 17% in Two Days and Crosses $230

Following the Q2 delivery report, the market will shift its focus to two other catalyst events for Tesla, including whether the upcoming earnings report in July will boost the stock price, and what impact the Robotaxi debut in early August will have on its AI narrative.

Q2 Highlights: Tesla Deliveries Beat Consensus, Energy Storage Surprises

Tesla reported 444k Q2 deliveries, surpassing Wall Street's expectations of 439k and securing its position as the world's top-selling electric vehicle. This impressive result was driven by a variety of factors, such as incentives offered by Tesla, including 0% or low rate financing in several regions, as well as the Model 3 Long Range variant recently regaining IRA tax credit eligibility in the United States. According to Morgan Stanley analysts, Tesla's Q2 report is considered to be the "first positive auto surprise of the year.

Furthermore, Tesla distributed 9.4 GWh of energy storage in Q2, setting an all-time record high and driving Tesla's energy storage deployment to reach 13.5 GWh in the first half of this year, approaching the deployment of 14.7 GWh for the entire year of last year. Tesla's energy storage business mainly consists of two types of products, Powerwall and Megapack. This business is considered as Tesla's key card and a key winning hand for the next round of AI investment by Morgan Stanley.

According to Morgan Stanley's Adam Jonas, the enormous electricity demand for AI data center will make Tesla a key participant in the US energy market. He predicts that Tesla Energy's revenue in the 2024 fiscal year will exceed $7 billion, and by 2025, the profit margin may exceed that of Tesla's automotive business. By 2030, Tesla Energy will make a significant contribution to Tesla's overall profitability.

Tesla's Latest Earnings and Robotaxi Day: The Next Big Things to Watch

It is worth noting that the delivery data is just one of the short-term factors affecting Tesla's stock price. Investors will face two other key events in the next six weeks, the latest earnings report and the debut of the Robotaxi.

● Brace for Upcoming Earnings: Should Investors Make a Short-term Bet on Tesla's Pre- and Post-earnings Pattern?

Analysts have lowered their Q2 earnings expectations for Tesla as they cut second-quarter delivery expectations. The slowdown in the company's car sales is already priced in, and lower profit expectations mean that the threshold for meeting expectations is also lower. This potential earnings management could become another factor affecting Tesla's stock price. Historical data shows that in the past few years, Tesla's stock price has suffered setbacks in the two weeks leading up to earnings announcements, and then rebounded in the following two weeks.

Specifically, in the past 12 earnings cycles, Tesla's stock price has fallen an average of 2.9% in the two weeks leading up to earnings announcements, and then risen an average of 6.7% in the two weeks following the announcements. Tesla's pre- and post-earnings pattern offers a betting space of about 10%.

Furthermore, traders are increasingly optimistic about Tesla's stock price in summer, as July has historically been a good month for Tesla. Over the past nine years since 2015, Tesla's stock price has risen six times in July.

● Tesla's Robotaxi Day: A Defining Moment in Its Growth Trajectory

Elon Musk has previously stated that the long-term value of Tesla will be driven by artificial intelligence and robotics. The Robotaxi debut on August 8th will mark a historic milestone for the company's progress towards autonomous driving, during which Tesla will showcase its full self-driving (FSD) capabilities and future vision to the public. This event may serve as another catalyst for Tesla's stock price and reiterate the company's vital role and growth prospects as a player in the AI industry.

Dan Ives, an analyst at Wedbush, believes that autonomous driving and the FSD vision are key factors in Tesla's valuation surpassing $1 trillion. The latest release of FSD v12.4 and ongoing FSD testing in China are seen as turning points for the company.

Divergent Views: Bullish and Bearish Perspectives on Wall Street

Opinions among Wall Street analysts are divided on whether the current rally of Tesla can continue.

● Bullish Outlook:

Optimistic views mainly revolve around the demand recovery for electric vehicles, Tesla's AI narrative, energy storage business, and growth potential from the fully autonomous Robotaxi service.

Adam Jonas, a long-term Tesla bull and analyst at Morgan Stanley, is bullish on Tesla's new energy and energy storage businesses, and has given Tesla an overweight rating and a market-leading target price of $310.

Wedbush's Dan Ives also expressed optimism, stating that Tesla's electric vehicle demand story is returning, and that the worst-case scenario has passed ahead of the historic Robotaxi Day on August 8th. He raised his target price for Tesla's next 12 months from $275 to $300 and predicts that the stock will double to $400 by 2025.

Garrett Nelson at CFRA believes that Tesla's significantly better-than-expected delivery figures have greatly alleviated concerns over weak electric vehicle demand, and has raised the target price for the next 12 months by $20 to $250.

● Bearish Outlook:

The bearish still express concerns about Tesla's fundamentals and believe that Tesla's leading position in electric car sales in the United States is diminishing. According to the Motor Intelligence data, Tesla accounted for nearly half of the electric car sales in the United States in May, which further narrowed compared to about 60% in the same period last year.

In addition, 12 out of the 15 technical indicators tracked by moomoo have issued warning signals, indicating that the stock may be overbought.

Wells Fargo has recently included Tesla in its Q3 "Tactical Ideas List" as an Underweight. Wells Fargo estimates that the company's auto gross margin, excluding credits, will decrease by 210 basis points year-over-year in Q2, owing to the possibility of further price cuts and lower sales volumes. It remains apprehensive about the moderating trends observed in all three of Tesla's primary regions: The United States, the European Union, and China. According to Wells Fargo, Tesla has few options left to increase sales volumes, apart from pricing and model updates.

Source: The Fly, Bloomberg, CNBC

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