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Tesla stock rises again, extending monster 40% rally over the last month

In-depth Tesla stock analysis covering the recent 40% price rally, bullish and bearish factors impacting performance, and key events that may influence future growth.

Tesla's stock price has rallied over 40% in the last month, sparking renewed debates on whether now is the right time to invest or if patience is still warranted.

Tesla's Rollercoaster Ride: What's Driving the Electric Automaker's Extreme Stock Price Swings?

Tesla's stock price has been on a wild ride over the past year, with huge rallies and sharp declines leaving some investors with whiplash. After plummeting as much as 40% from January through April 2022, Tesla stock has rebounded with gusto, surging a monster 40% rally over the last month and notching its longest winning streak in over 12 months.

So what's behind this electric automaker's extreme volatility? And what factors have bulls and bears placing their bets on where Tesla stock price heads next? This post examines the key drivers sparking renewed optimism — as well as the lingering concerns causing some to hit the brakes on Tesla's valuation.

Contents

• Recent Performance Fuels Comeback
• Growing Business Lines Buffet Bull Case
• Slowing Economies and Competition Spook Investors
• Major Milestones Could Provide Catalysts
• The Bull and Bear Debate on Tesla's Future

Recent Performance Fuels Comeback

A string of better-than-expected results has helped drive Tesla’s shares back near breakeven for 2024 after steep losses early this year. Propelling the stock's outperformance against even hot tech stocks, Tesla posted strong quarterly deliveries that beat Wall Street estimates.

August 2022 marked one year since Tesla stock price hit its peak of nearly $1,250 per share (split-adjusted). While still below last year's all-time highs, the recent rebound rally has been nothing short of remarkable when you consider:

• Tesla stock has risen over 70% from April lows
• Shares have recovered nearly all year-to-date losses
• Stock is handily outpacing broader markets, with the S&P 500 up just 3.5% over the same period

Driving this momentum, Tesla delivered over 254,000 vehicles in Q2 2022 despite plant shutdowns and supply chain woes. The company also touted strong demand, especially for its flagship Model Y. While analysts expected around 238,000 deliveries, Tesla exceeded forecasts by over 6%.

Key Takeaway: Recent delivery beats and production milestones have sparked a surge in Tesla's stock price over the past month.

Bears have warned the company won't escape unscathed from broader economic headwinds. But resilience shown in the latest numbers helped spark a short-squeeze, with Tesla remaining the most shorted stock in the U.S.

Growing Business Lines Buffet Bull Case

Beyond deliveries, bullish analysts also highlight Tesla’s success ramping its energy storage business — now its fastest growing segment. The company's Megapack and Powerwall products drove record storage deployments in Q2, installing over 1 GWh to more than double year-over-year growth.

Tesla expects to begin making its own battery cells by the end of 2023, which could boost profit margins on storage products. And the automaker continues expanding charging infrastructure — now up to 3,971 Supercharger and destination charging locations globally.

Meanwhile, optimism in China remains high despite Covid lockdowns. Tesla sold 78,906 China-made vehicles in June, breaking its monthly record. The company also scored a win with China government agencies now allowed to purchase Tesla vehicles, signaling further upside in the world's largest EV market.

Bulls believe initiatives like price cuts will allow Tesla to keep expanding sales and cement its first-mover advantage as the EV era shifts into high gear:

Key Takeaway: Investors are betting on Tesla's ability to leverage its brand, vertical integration and software edge to lead the EV revolution.

Slowing Economies and Competition Spook Investors

While the electric automaker defied skeptics with its recent delivery numbers, lingering headwinds temper forecasts. Sizzling inflation paired with rising interest rates have stirred up fears of a global economic slowdown.

With consumers paying more for food, housing, and energy, big-ticket purchases like vehicles may decline. With Tesla yet to weather a downturn as a public company, investors remain cautious regarding demand trends.

Rising competition from Chinese EVs like BYD and Nio also threatens Tesla’s growth prospects. And legacy automakers from Volkswagen to Ford are accelerating their EV investments. Although Tesla maintains an edge in batteries, software and charging infrastructure, rivals are aiming to eat its lunch in the coming years.

Add it up and Tesla faces immense pressure to sustain rapid production expansion and deliveries, especially if consumer EV demand wanes. The company already reversed course on growth plans, pausing Cybertruck and Semi programs while cutting over 10% of staff.

Musk cited the moves as preparation for a potential “recession of unknown length", warning:

"A recession would have a ripple effect on our supply chain. It could force us to temporarily dial back production further."

Fretting the impact of plant closures in Shanghai where Tesla generates major profits, analysts warn further price cuts may pressure margins should demand growth stall.

Key Takeaway: Even with a dominant position, Tesla must skillfully navigate macro uncertainty and ever-fiercer competition.

Major Milestones Could Provide Catalysts

With Tesla’s valuation riding on peaks and valleys of business execution and external shocks, upcoming events stand to shape next moves.

First up, the company's Q2 2022 earnings hit on July 23rd with analysts laser-focused on automotive gross margin trends. Profitability has become a key debate given price cuts made in China and concerns company-wide discounts may follow if buyers pull back.

Potential positive catalysts include any signals backlogs and order rates continue to trend strongly. Management may also issue initial Cybertruck reservations tally updates.

But the big event circled on every Tesla watcher’s calendar lands on August 8th: AI Day #2. At this long-awaited technology showcase, Elon Musk takes the stage to unveil Tesla's robotaxi ambitions and latest self-driving innovations.

While Tesla already boasts the industry’s most advanced driver assist technology, Musk aims higher: delivering full self-driving (FSD) capabilities surpassing human drivers. Hitting that milestone requires solving immense AI challenges.

On AI Day 2021, Tesla impressed showcasing its Dojo supercomputer specialized for neural net training. But rivals are moving fast, with Chinese search engine giant Baidu applying similar AI chips to accelerate AV advances.

If Tesla delivers substantive progress toward a self-driving rideshare network, the stock could rocket higher. But with past promises of robotaxis by 2020 unmet, investors may have more measured responses absent major breakthrough moments.

Key Takeaway: Q2 earnings and especially August’s AI Day mark potential pivotal moments, depending on technology and business execution.

The Bull and Bear Debate on Tesla's Future

Zooming out from quarterly wins and losses, Tesla finds itself at the center of clashing long-term visions over the auto industry’s transformation. The company was built to catalyze sustainable transport, but does that make for a good investment?

Bulls like ARK Invest's Cathie Wood proclaim Tesla as nothing short of revolution incarnate. Backing her lofty $3,000+ per share price target, Tesla's ace card lies in bringing software closer to the physical world. The potential value flowing from vehicle connectivity and autonomy may ultimately dwarf profits from selling cars.

Add rapid storage and generation expansion, and Tesla begins to morph into an integrated sustainable energy provider. If it succeeds, returns could reflect the immense TAM across electric vehicles, batteries, solar power, and distributed energy infrastructure.

What's your take - is Tesla poised for even higher growth or due for a pullback? Share your perspectives by commenting below.

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