Tesla (TSLA) stock closed up about 4% on Tuesday, marking its 10th straight day of gains.
The positive moves mean Tesla has erased all of its year-to-date losses, up about 5% year-to-date. Shares are also up about 75% since hitting a 52-week low in April.
Analysts have attributed Tesla’s second-quarter vehicle production and deliveries numbers, which beat Wall Street expectations, to Tesla’s success, as well as momentum surrounding Tesla’s artificial intelligence efforts.
“All of a sudden, the market is appreciating Tesla’s growth potential,” Seth Goldstein, equity strategist at Morningstar, told Yahoo Finance. “First-quarter deliveries surprised negatively, so the market was expecting a lower growth rate, and that’s why we’ve seen the big rally.”
Tesla is expected to report its next quarterly results on July 23 after the market closes. The company has announced its development of more affordable electric vehicles, which investors see as another major catalyst for growth.
However, Goldstein said the company needs to establish a “solid, concrete timeline” when it comes to rolling out those cars, which the company said could happen as early as 2025.
“We need to make sure that this is achieved sooner or brought forward so that [Wall Street] “We can assume that Tesla will see a second wave of delivery growth starting in 2026,” he said. “As long as that story remains intact, I think the stock will be okay. But if that gets delayed or if management sounds more uncertain that that’s going to happen, then I think we could see the stock falter.”
In addition to profits and deliveries, investors will also be looking at another growth opportunity: robotaxis. The company is expected to unveil its long-awaited robotaxi on August 8.
Tesla shares tumbled in the first half of the year after its fourth-quarter financial report missed both the top and bottom lines. A 9% year-over-year decline in first-quarter vehicle deliveries sent the stock lower even further as investors questioned the EV maker’s lofty valuation and the lingering demand in the U.S.
Shortly after the failed delivery, the company cut more than 10% of its workforce. Analysts at the time described the layoffs as an “ominous signal” of things to come.
Competition from overseas Chinese EV manufacturers including Lucid (LCID), Li Auto (LI), Nio (NIO) and XPeng (XPEV) has also played a major role, fueling a price war that has forced Tesla to significantly cut prices in order to compete.
As a result, short sellers have been piling into the name, but they have now been crushed by the recent rally.
“Short sellers have been up and down on this name for the last few 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 this is like the OG short. Everyone’s still in.”
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and send her an email at [email protected].
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