Tesla shares post 10th straight day of gains as investors eye growth potential

Tesla (TSLA) stock closed up about 4% on Tuesday, securing its tenth consecutive day of gains.

These positive developments mean that Tesla has erased all of its year-to-date losses, with the stock up about 5% since the start of the year. Shares have also jumped about 75% since hitting a 52-week low in April.

Analysts have given the company second quarter vehicle production and delivery figures, which beat Wall Street expectations, as well as momentum surrounding Tesla’s artificial intelligence business.

“All of a sudden, the market is pricing in Tesla’s growth potential,” Seth Goldstein, equity strategist at Morningstar, told Yahoo Finance. “First-quarter deliveries surprised to the downside, so the market was expecting a lower growth rate, and that’s why we’ve seen a strong rally.”

Tesla is scheduled to report its next quarterly results on July 23 after the market close. The automaker has cited the development of more affordable electric vehicles, which investors see as another key growth catalyst.

But Goldstein said the company will need to establish a “solid, concrete timeline” for launching those cars, which the company said could happen as early as 2025.

“We need to see that scenario play out or increase sooner for (Wall Street) to assume that Tesla will see a second wave of delivery growth starting in 2026,” he said. “As long as that scenario remains intact, I think the stock will do well. But if that gets pushed back or management seems more uncertain about what’s going to happen, then I think we could see the stock falter.”

Beyond earnings and shipments, investors will also be watching for another growth opportunity: robotaxis. The company is expected to unveil its highly anticipated robotaxi on August 8.

Tesla shares fell in the first half of the year after its fourth-quarter financial report missed revenue and profit targets. A 9% drop in vehicle deliveries in the first quarter from a year earlier sent the stock further down as investors questioned the electric-vehicle maker’s sky-high valuation and continued demand in the United States.

Shortly after the failed delivery, the company laid off more than 10% of its workforce. At the time, analysts called the layoffs a “worrying sign” of things to come.

Foreign competition from Chinese electric vehicle makers including Lucid (LCID), Li Auto (LI), Nio (NIO) and XPeng (XPEV) has also been a significant headwind, fueling a price war that has forced Tesla to slash its prices to remain competitive.

Short sellers rushed into the name as a result, but have now been crushed by its recent rally.

“Short sellers have had their ups and downs on this name over the last couple of years. It was the No. 1 short in the market. Now it’s No. 4 behind… Nvidia, Apple and Microsoft,” Ihor Dusaniwsky of S3 Partners told Yahoo Finance on Tuesday. “But it’s like the original short. Everybody’s still in it.”

Tesla and SpaceX CEO Elon Musk listens to a question as he speaks at the SATELLITE Conference and Expo in Washington, March 9, 2020.

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