Tesla’s stock price has been on a wild ride this year. After closing at $248.48 at the end of last year, the stock fell to as low as $138.80 in April. However, the tide turned on Friday when the stock rose enough to wipe out its losses for the year and end the week with a 27% gain. This turnaround was fueled by a better-than-expected deliveries report for the second quarter that gave investors reasons for optimism heading into the second half of the year.
In April, Tesla faced several challenges that caused its stock to hit a 52-week low. Sales in the core automotive business fell in the first quarter, the company underwent significant layoffs, and there were reports that plans to produce a low-cost family car in Texas had been scrapped. Despite these setbacks, Tesla has been offering discounts and incentives to attract customers to its lineup of electric vehicles, including the Model 3, Model Y, Model S, Model X, and the Cybertruck.
Strong Competition in the Electric Vehicle Market
Despite its recent success, Tesla faces stiff competition in the electric vehicle market. Ford reported strong sales of its fully electric model, the F-150 Lightning, in the second quarter. Additionally, a recent social media post claimed that the Tesla Cybertruck outsold all other fully electric pickups in the U.S. during the same period. As Tesla prepares to release its second-quarter financial results, automotive gross margins will be closely scrutinized by investors.
Looking ahead, Cantor Fitzgerald analysts expect Tesla’s upcoming marketing event, Robotaxi Day, to be a significant catalyst for the stock. The event, scheduled for early next month, will showcase Tesla’s plans for a Robotaxi service, which the company aims to launch in the future. While Cantor Fitzgerald predicts that Tesla will deliver fewer cars this year than last, they maintain a price target of $230 on the stock and recommend buying.
Challenges Ahead for Tesla
Despite its recent gains, Tesla continues to face challenges, both in the market and operationally. The company’s brand has experienced deterioration due, in part, to CEO Elon Musk’s controversial statements and political activity. Additionally, Tesla is still years behind schedule in delivering software that can turn its existing vehicles into self-driving cars. While Musk announced in 2016 that all Tesla cars being produced at that time had the necessary hardware for self-driving capabilities, the actual rollout has been delayed.
Tesla’s stock has had a tumultuous year marked by significant ups and downs. While recent gains have buoyed the stock, challenges both in the market and operationally remain. Investors will be closely watching Tesla’s upcoming earnings report and the release of its Robotaxi plans for further insights into the company’s future performance.
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