Tesla’s Post-Deliveries Surge Stretched from an EV StandpointTesla is having a rough year, being the underperformer of the Magnificent Seven group, as its peers surge. But the stock soared to new 2024 highs after the Q2 delivery report showed a substantial sequential increase, gaining more than 20% this week. Bulls are now back on the driver’s seat and have the opportunity to chase last year’s peak (299.29), although the record highs are distant.
However, this surge is hard to justify from a purely EV prospective. Tesla may have offloaded some of its inflated inventory in Q2, but deliveries were lower than a year ago, just as sales of Chinese rival BYD surged. Demand has weakened despite price cuts, the futuristic Cybertruck is not for mass production (and not for everyone) and we still have not gotten an update of the aging Model Y, which was the best-selling car of 2023. At the same time, there is some uncertainty around the crucial 25K affordable car that could accelerate sales and EV adoption, although it’s a price point where Tesla may have a hard time competing against Chinese firms.
Given these factors and the fact that the stock rally is stretched, a return below the EMA200 would not be surprising. This would create risk for new 2024 lows (138.80), but sustained weakness has a higher degree of difficulty.
Tesla at this point seems like a somewhat overvalued car maker, but an undervalued Artificial Intelligence company. At least part of the market optimism must be based on the AI promise. Elon Musk is preaching AI as the future of the firm, in a technology with the potential to unlock tremendous value as Tesla definitely has an edge, given the vast amounts pf proprietary data it collects from sources like the cameras and sensors in the hundreds of thousands of vehicles it has sold. The CEO pushes hard on full self-driving and robotaxis, with announcements expected in August, as well as humanoid robots and envisions more than a thousand of them working at Tesla factories next year.
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