- Tesla shares have had a rough first half of 2024, but Wall Street is seeing a turnaround.
- Second-quarter shipments were down, but not as bad as analysts expected.
- Now all eyes are on its Robotaxi and AI initiatives as it embarks on its next phase of growth.
After a difficult stretch for Tesla shares and much drama surrounding Elon Musk’s legal battles, the electric vehicle maker may finally be ready for a comeback, according to a chorus of Wall Street analysts.
Investors have been eyeing a possible stock rally for more than a year, with Tesla’s sales down 15% over the past 12 months. Tesla shipments fell for the second quarter in a row, but they were stronger than analysts expected, coming in at 443,956 compared with estimates of 436,000.
The numbers could be a sign that better days are ahead for the carmaker, especially as Musk puts the “tenovela” surrounding his pay packet to bed and investors look to AI developments on the horizon.
“Tesla getting its mojo back?” Morgan Stanley strategists said in a note on Tuesday. “A little over 2 weeks ago our clients were preparing for shareholders to reject Elon Musk’s 2018 settlement package that could create a management and strategy shakeup, compounding many months of negative news flow. Fast forward to today, clients are starting to ask us about positive catalysts in 2Q results and beyond.”
Tesla also reduced its inventory during the second quarter and increased energy storage to an all-time high. Strategists said the higher energy storage was a “show-stealing” update, as it suggests Tesla could benefit from increased energy demand stemming from the AI boom.
“As the acceleration of the artificial intelligence generation drives multi-generational growth in energy demand, power generation and data center investment, we believe investors will begin to pay more attention to Tesla Energy which we We value Tesla at $36 per share ($130 billion) as a uniquely positioned business. to take advantage of investment in the US power grid accelerated by the AI boom,” they said.
Morgan Stanley reiterated its “overweight” rating on Tesla shares with a price target of $310, implying another 30% upside.
“The stock continues to ride a wave of positive momentum after its annual meeting in mid-June,” said Garrett Nelson, a senior equity strategist at CFRA Research, adding, “We think Musk successfully shifted investors’ focus on long-term opportunities in AI, robotics, energy storage and other lines of business, taking the focus away from short-term challenges.”
Nelson added that Wall Street was focused on Tesla’s Robotaxi, the full self-driving service that Musk has teased for months and said could be a “massive driver” of future growth.
CFRA maintained its “buy” rating on the stock and raised its price target to $250 per share, implying just 1% upside.
Other strategists had even better calls after the better-than-expected shipments figure.
“I think stocks are going to double or triple, maybe even more, in the next few years. And again, we’re in the early stages,” Keith Fitz-Gerald, director of Keith Fitz-Gerald Research, told CNBC on Tuesday. , adding: “This is about power. This is about robotics. I think it’s probably the best underrated AI game on the planet right now. And love it or hate it, Musk knows what he’s doing. “
Wedbush Securities analyst Dan Ives previously said Tesla could see sharp growth in the second half of the year, as the debut of Robotaxi represents a turning point for the company.
Wedbush reiterated its “outperform” rating on Tesla and raised its price target to $300 per share. Ives said that in the most bullish scenario, Tesla shares could rise to $400 by the end of the year, implying a 63% upside from current levels.
“The key for Tesla stock is for the Street to recognize that Tesla is the most undervalued AI play in the market in our view,” Ives said in a note, later adding, “In short, the worst is in rearview mirror for Tesla as we believe the EV demand story is starting to turn into the disruptive force of technology ahead of a historic Robotaxi Day on August 8.”
Tesla shares rose as much as 10% on Tuesday after it reported the shipments, and they pushed 6% higher on Wednesday to trade at around $246. The stock has retraced nearly all of the losses seen in 2024, with shares down less than 2% year to date.