Source: Zhitong Finance "Since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%)." With the rebound of the stock market, the old adage "Sell in May and Go Away" seems to have been a bad advice once again. Last month, the S&P 500 index rose 4.8%, the best May performance since 2009. The NASDAQ 100 index rose nearly 6.2%, and the NASDAQ Composite Index rose 6.9%. Goldman Sachs FICC & Equities Trading Division said: "History doesn't really support this saying. Don't sell, leave the market (go on vacation), and enjoy the good times." The rising trend is still to be continued? If history is any guide, it may indicate that the rise of the stock market is not over yet. Looking ahead to the rest of 2024, Scott Rubner, Managing Director of the Goldman Sachs Global Markets Division and tactical expert, pointed out the following historical background for investors. Rubner stated that the S&P 500 index has risen 10.7% year-to-date, and since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%). "Since 1950, the median return of the last 7 months of each year (June 1 to December 31) is 5.4%. In the aforementioned 21 cases, the average performance of the last 7 months increased to 8.1%." Rubner added. Rubner also pointed out that the NASDAQ index has risen for 16 consecutive Julys, with an average return of about 4.64%.

After a period of adjustment, electric car stocks have experienced a new round of rising.

Tesla has risen for seven consecutive trading days, up nearly 25% just this week. At the same time, Chinese electric car stocks also rose significantly, with Li Auto Inc. up nearly 16% this week, NIO Inc. rising over 17%, and Xpeng Inc. up nearly 14%.

The continuous rise of electric car stocks, does it signify the resurgence of the halo of the electric car industry?

Good news is continuous, and the electric car stock is booming.

After announcing better-than-expected second-quarter delivery data on Tuesday, Tesla's stock price soared and sparked a frenzy in the electric car sector.

Data showed that Tesla delivered 443,956 cars in the second quarter, down 4.7% year-on-year, but higher than analysts' consensus forecast of 436,000. According to FactSet data, this is the first time in the past four quarters that earnings have exceeded expectations, and the magnitude is also the largest since the fourth quarter of 2021.

The better-than-expected delivery data also won Tesla the favor of Wall Street analysts. Bank of America analysts raised Tesla's target price from $220 to $260, while Wedbush analysts raised their target price from $275 to $300.

Wedbush analysts wrote in a report on Tuesday that demand for electric cars worldwide appears to be stabilizing after falling in early 2024, and added that Tesla's delivery data marked a "major turning point" after a "very volatile" beginning of the year.

"The launch of more and more affordable electric cars this year and in the future will drive up sales of electric cars," Bank of America analysts said.

In addition, on Wednesday, Tesla announced on Weibo that its second-generation humanoid robot Optimus will debut at the 2024 World Artificial Intelligence Conference in Shanghai from July 4 to 7, "witnessing the further evolution of humanoid robots." This news stimulated Tesla to close at $246.39, up 6.54% on Wednesday.

Tesla has now risen for seven consecutive trading days, up nearly 25% just this week. As the rally continues, Tesla's stock price is approaching this year's high. It is understood that since the release of Q1 earnings on April 24, Musk reiterated the importance of FSD and will accelerate the launch of low-cost models, Tesla has experienced a strong rebound. As of the close of July 3, Tesla rebounded 78% over a period of more than two months.

This week, Tesla competitors, including Rivian, also released good delivery data, indicating that the electric car market is recovering.

Rivian, once known as the "Tesla Killer," rose more than 9% this week and soared 30% last week. The stock rebounded nearly 80% from its annual low. It was reported that at the end of June, Volkswagen announced an investment of up to $50 billion in Rivian, which stimulated Rivian's after-hours trading to rise more than 50%.

The electrification transformation of some traditional car companies is beginning to show results. Ford Motor's hybrid and electric car sales performed well. Data showed that Ford's second-quarter car sales rose 1% year-on-year to 536,050, with electric car sales up 61% to 23,957, a year-on-year increase of 72%, second only to Tesla; hybrid car sales rose 56% to 53,822. Investors are increasingly interested in the stock. The stock rose nearly 3% this week and nearly 10% this year.

It is worth noting that the Chinese luxury electric car market seems to be improving. In June 2024, Li Auto Inc. delivered 47,774 new cars, a year-on-year increase of 46.7%. As of June 30, 2024, the cumulative delivery of Li Auto Inc. reached 822,345 units, ranking first in the total delivery of China's new forces brands. Morgan Stanley believes that after the recent sell-off of Li Auto Inc. stocks, the short-term valuation is more attractive, and Li Auto Inc. (02015) has a "shareholding" rating with a target price of HKD 205, which is 150% higher than the current level.

At the same time, other Chinese electric car brands also released strong delivery data. In June 2024, Xpeng Inc. delivered a total of 10,668 new cars, a year-on-year increase of 24% and a month-on-month increase of 5%. NIO delivered a total of 21,209 new cars, a year-on-year increase of 98%, reaching a historical high.

As of Wednesday's close of U.S. stocks, Li Auto Inc. rose nearly 7%, rebounding 17% from its annual low; Xpeng Inc. rose more than 9%, rebounding 27% from its annual low; and NIO Inc. rose nearly 8%, rebounding 35% from its annual low.

Is the electric car halo shining again?

Electric car stocks used to be investors' darlings, attracting a lot of attention with their innovative technology and eco-friendly concept. However, with sluggish demand and intensified competition, electric car stocks have also experienced a period of adjustment.

In the first half of 2024, Tesla fell 20%, with a market value evaporating by $161.4 billion, becoming the S&P 500 Index component stock with the largest decline in market value. After a recent surge, Tesla is close to recovering from its year-to-date decline.

In contrast, Rivian has fallen 38% year-to-date, Lucid Group (LCID.US) has fallen 30% year-to-date, and the year-to-date decline of XPeng and Li Auto Inc. is over 40%. And U.S. electric car maker Fisker has already filed for bankruptcy protection.

Overall, despite recent delivery data being good, the road ahead for electric car manufacturers remains rocky.

Although Tesla's second-quarter deliveries unexpectedly exceeded expectations, deliveries fell year-on-year for the second consecutive quarter. According to CNN, the decline in Tesla's second-quarter sales from the previous year indicates increased competition in the electric car market. Despite the overall growth of electric car sales, the growth rate of the entire industry has been proven to be lower than expected.

Market research firm Edmunds director Jessica Caldwell also warned that "with more frequent price cuts and incentives, Tesla's ability to attract consumer attention is declining."

It is worth noting that as the global leader in electric cars, Tesla's stock price is often seen as a barometer for the electric car market. However, Tesla's stock price is not always fully reflective of the trend of the entire electric car market, as its business areas extend beyond electric cars.

Tesla CEO Musk has said that compared to the clean energy business, Cybercab taxi service, and humanoid robots, its consumer car business will ultimately pale in comparison.

Several Wall Street institutions also agree with this view.

Wedbush analyst stated that Tesla was more of an AI and robotics company than a traditional automaker, thanks to its projects such as fully automatic driving software, robot taxis, and AI robots.

"In our view, the key to Tesla's stock is that Wall Street recognizes Tesla as the most underestimated AI company on the market. On August 8th, Musk and Tesla will welcome a historic robot taxi day, which will pave the way for the future of FSD and autonomous driving," said Wedbush analyst.

Morgan Stanley analyst Adam Jonas believes that as long as investors view Tesla as a car company facing increasingly fierce competition, its stock price will face risks. But in the long run, Jonas expects Tesla's valuation to soar like other tech giants. "Automobiles are to Tesla what gaming chips are to Nvidia (NVDA.US). Automobiles are to Tesla what book sales are to Amazon," he said.

Overall, although Tesla's stock price rebound can partly reflect the market's confidence in the recovery of the electric car industry, investors believe that Tesla is not just a car company. In the shadow of high interest rates, the days are still not easy for other electric car companies.

Editor/Lambor