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Tesla's Stock is Soaring. Here's Why One Bear Doesn't Believe the 'Euphoria' Hype

July 3, 2024
minute read

Tesla Inc.’s stock is experiencing a significant rally, potentially adding approximately $175 billion to its market capitalization during the current winning streak.

Despite this surge, Guggenheim analyst Ronald Jewsikow maintains a bearish perspective, even after Tesla's impressive delivery numbers. The electric-vehicle manufacturer reported 444,000 units delivered in the second quarter, surpassing the 437,000 consensus estimate, which Jewsikow described as “a materially positive surprise.” However, he remains cautious, suggesting that the strong performance last quarter might complicate future results.

For more details: Tesla’s stock soars as deliveries exceed expectations by a large margin

Jewsikow attributes the substantial volume growth to financing promotions on the Model Y and Model 3. He warns that, similar to previous significant price cuts and discounts, this growth may have merely pulled demand forward. Creating new demand in the third quarter and beyond could prove challenging, as seen over the past 18 months.

Tesla faces several hurdles as it enters the second half of the year. Jewsikow pointed out issues such as “production cuts, share losses in China, and tariffs in Europe.”

Tesla’s stock is poised for a seventh consecutive day of gains, showing particular strength this week. The stock rose 6.1% on Monday, just before the delivery report, followed by a 10.2% increase on Tuesday after the figures were released. It’s up another 3.1% in Wednesday morning trading.

Jewsikow noted that many investors are hesitant to short Tesla’s stock ahead of a robotaxi-focused event in August, based on his recent discussions. Nevertheless, he maintains his fundamental concerns.

“Despite the euphoria, we do not see a path to volume and margin growth over the next several quarters and would expect additional negative pricing actions and promotions to return before the end of July,” he wrote. While retaining his sell rating on the stock, he increased his price target from $126 to $134.

Conversely, other analysts responded more positively to the delivery report. Wedbush analyst Dan Ives, for instance, has a more optimistic outlook.

“With most of the price cuts behind us and global demand for EVs, especially in China, stabilizing, we believe Tesla is on track to reach an annual trajectory of 2 million units in the coming quarters, supported by clear momentum and easier comparisons for 2025,” Ives stated.

Ives raised his Tesla price target from $275 to $300, with a new bull-case target of $400 for 2025.

Citi Research analyst Itay Michaeli also sees potential for improved sentiment regarding Tesla’s stock and the broader EV market, compared to the negative sentiment observed over the past six months.

He rates the stock as neutral with a target price of $182.

Adan Harris
Managing Editor
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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