Tesla's stock price was volatile on Friday, July 5th, as the world's highest-valued auto manufacturer wiped out all cumulative losses for the year after a seven-day consecutive rise.
During the latest round of gains, Tesla's stock price rose over 30%, increasing its market cap by over $200 billion. #2024 macro outlook# #2024 investment strategy# #AI boom#
Earlier this week, the company announced its Q2 delivery volume, which beat the average analyst expectations and further boosted the stock price.
If Tesla (TSLA) could be seen as a technology company when automotive sales were sluggish, there is no doubt it can be seen as a car company when sales exceed expectations. This is how Wall Street views Tesla, as the bull market of Tesla rises again.
In the past week, Tesla's stock price skyrocketed over 25%, thanks to vehicle delivery volume exceeding expectations, far surpassing other 'magnificent seven' technology giants in profit.
Earlier this year, when CEO Elon Musk claimed Tesla wasn't a car company, it shocked the stock price during a sales slump. Although it was convenient, it was true. And this principle is clearly bidirectional.
(Image source: finance.yahoo)
The surge in stock price indicates the power to promote leading products in the industry - a lesson for AI startups - as well as to incorporate the AI vision as part of a broader business plan, rather than just a single aspect. On the other hand, it also highlights that Tesla's lofty AI goals are still closely related to its auto sales.
Combining high-tech ambition with auto sales has always been key to Musk's promotion.
"In a nutshell, the worst is behind us, and we believe the electric vehicle demand story is starting to return to this disruptive tech giant," said Tesla supporter and Wedbush Securities' Dan Ives in a report earlier this week.
Optimistic delivery data offsets a wave of negative sentiment.
Tesla has been lagging behind other 'magnificent seven' technology giants due to increased competition, weak Asian demand, price cuts, layoffs, and Musk's legal and corporate turmoil. But recent victories can erase earlier losses. And Tesla is now riding a wave of triumphs with the upcoming earnings report and highly anticipated autonomous driving taxi release.
(Image source: finance.yahoo)
Investors are accepting this mood of change. Since the lows in late April, Tesla's stock price has risen over 60%.
But even some Tesla supporters are picking apart this surge. Certainly, Tesla exceeded expectations, but sales were down from the same period last year. How will more aggressive rivals and cheaper prices erode profits?
"In fact, Tesla's electric vehicle sales are down 5%, and the company seems to be succumbing to the idea of selling electric cars. Now it's all about autonomous driving and ride-hailing," said Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management. The flexible identity as a car company during the peak and as a technology company during the low may pose obstacles to a clear corporate strategy.
Is Tesla still striving for mass-market electric cars for every household driveway? Or is it a platform organizing autonomous driving taxi fleets, expanding the forefront of AI technology?
Wall Street believes it can have both. Musk tends to want everything. And investors don't seem to mind which metaphor the company wears on any given day as long as the numbers are up, AI can achieve this, and at present, so can cars.