Shares of Tesla, the leading electric vehicle (EV) company, are set to break their losing streak as the market and Wall Street lend their support.
Over the past six trading sessions, Tesla's stock has experienced a decline, marking six consecutive days of losses. Furthermore, out of the past 14 trading days, the stock has fallen in 13. This translates to a nearly 10% drop in share value in the last six sessions and a 17% decrease over the past 14. Investor sentiment has been affected by a combination of factors such as a general market downturn, concerns regarding electric vehicle pricing, and troubling Chinese economic conditions.
While Tesla faces these challenges, the Nasdaq Composite has also been struggling, with a decline of approximately 7% over the past 14 trading days due to rising bond yields. Additionally, Citi analyst Jeff Chung reported that other electric vehicle companies in China have implemented 23 price cuts within the first few weeks of August. The recent bankruptcy filing by China Evergrande further contributed to concerns about the overall health of the Chinese economy. As China holds the largest market for new cars and EVs, this news has raised apprehension among investors.
However, on Monday, Tesla's stock is showing signs of resilience, with a 2.9% increase. In comparison, S&P 500 and Nasdaq futures are up by 0.4% and 0.6% respectively.
One factor driving this bounce is Baird, a brokerage firm that has included Tesla in its list of "best ideas" following the company's second-quarter earnings report. Analyst Ben Kallo, while acknowledging that price cuts may impact profit margins, identifies several upcoming catalysts such as the launch of Cybertruck, broader adoption of Full Self Driving Software (FSD), continued growth in the Energy business, expansion into new markets, and the potential for an AI Day event.
Tesla is determined to overcome the recent challenges and regain investor confidence. With the support from market trends and the positive outlook presented by Baird, the future looks promising for the EV giant.
FSD and the Future of Tesla
Tesla's Full-Self Driving (FSD) software is the pinnacle of their driver assistance system. Through the power of AI training, FSD continues to improve, making it an enticing purchase for an increasing number of people. With a price tag of $15,000, or the option of a monthly subscription, FSD offers cutting-edge technology for enhanced driving experiences.
The Impending Arrival of the Cybertruck
Since the shipping of the Model Y in 2020, Tesla enthusiasts have eagerly awaited the release of the Cybertruck. This futuristic pickup truck, unveiled in 2019, is now on the cusp of reaching customers' driveways. As Tesla's first new model in years, the Cybertruck is set to make a lasting impression.
Tesla's Success in Energy Storage
In 2023, Tesla's energy storage business has thrived and gained significant momentum. A remarkable achievement has been the deployment of 7.5 gigawatt-hours of battery storage in just the first two quarters of the year, marking an impressive 280% increase compared to the previous year.
Diversification in Non-Auto Sales
While Tesla's primary focus is on automobiles, their non-auto business has experienced significant growth. In the second quarter, non-auto sales accounted for approximately 15% of Tesla's total sales, up from 14% in the same quarter last year. This diversification highlights Tesla's commitment to expanding beyond the automotive industry.
Kallo's Promising Stock Recommendations
In addition to Tesla, investment expert Kallo cited several other companies as noteworthy investments. These include lithium miner Albemarle (ALB), solar energy firms Hannon Armstrong Sustainable Infrastructure Capital (HASI) and Sunnova Energy (NOVA), biofuels player Darling Ingredients (DAR), and battery start-up Fluence Energy (FLNC). Kallo rates all of these stocks as "Buy" with specific price targets assigned to each.
In conclusion, Tesla's FSD software, upcoming Cybertruck release, and successful energy storage business all contribute to the company's ongoing growth and expansion into various sectors. With positive stock recommendations from experts like Kallo, Tesla continues to solidify its position as a leader in the automotive and energy industries.
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