Pioneering EV manufacturer Tesla (NASDAQ: TSLA) is leading the entire EV market higher and into a potential reversal that could take it and its peers into the new all-time high territory. Stocks from Rivian (NASDAQ: RIVN) and Workhorse Group (NASDAQ: WKHS) to Nikola (NASDAQ: NKLA), Nio (NYSE: NIO), and even Ford (NYSE: F) and GM (NYSE: GM) are moving higher on a brightening outlook for auto sales and for EV automobiles in general. Once sky-high estimates for industry growth have been replaced by even higher figures due to a systemic ramp in production that promises to drive Tesla and its competitors to record results.
The rebound for the EV industry began with a bottom in the early summer, and that was compounded by Tesla’s Q2 earnings report. While the Q2 figures were on the tepid side in regard to top-line expectations, there were mitigating factors in play, and the margin came in better than expected. With the headwinds (China shutdowns, supply chain, etc) diminishing, it looks like the rebound in business activity is already underway … and there is the recent opening of two new Gigafactories and the global ramp in production to factor in as well.
The Analysts Are Optimistic Tesla Will Hit Targets
The analysts were happy enough with Tesla’s Q2 results to issue 9 price target adjustments that were all favorable to the market. Seven of the adjustments were outright price target increases while the two reductions were both at least in-line with the consensus figure and combined for a two-analyst consensus of $900. That consensus is $50 or 6% above the current Marketbeat.com consensus and predicts about 7% of upside for the stock. The consensus, notably, is down in the 30 and 90-day comparisons and implies a fairly-valued market but the post-release activity seems to have put a bottom in sentiment, at least for now. As it is, the analyst's rate Tesla a Hold.
“In a nutshell, the quarter was better than feared with healthy guidance for 2H by Musk & Co. that look achievable with no margin for error,” said Dan Ives of Wedbush. “Any speed bump in 2H around China will take the 50% growth number off the table which will be the big debate in the stock over the coming months starting this morning.”
Tesla To Vote On Stock Split, Teases A “Cyber Roundup”
Tesla is holding a shareholder meeting this week and shareholders are expected to vote on a stock split. The split follows a series of high-profile splits from tech juggernauts like Apple, Amazon, and Google the market seems to like. The main takeaway is that Tesla shares, if split, would become “more affordable” for a larger group of investors but also enter a period of volatility driven by profit-taking, speculation, and analysts' readjustment to targets. In addition to the split, and possibly more interesting, is news of a “Cyber Roundup” that teases information about the Cyber Truck and/or other new developments in EV technology.
The Technical Outlook: Tesla Is In An Updraft
Tesla shares are moving higher in an updraft driven by less-than-feared results, improving analysts' sentiment, and the potential for a large stock split that promises to drive volatility if nothing else. The move higher is supported by the indicators so additional upside is expected, the caveat is that resistance is possible at several technical levels including the round number of $1,000 which is very close to a down-sloping trend line put in place earlier in the year. If the market can get above the $1,000 level a move up to $1,100 and $1,200 is possible. If not, this market may remain range bound with a chance of hitting the $600 level. Tesla still trades at an incredibly high valuation that prices in more than just the EV business.
Tesla is a part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.
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