Shares of Elon Musk’s Tesla (NASDAQ:TSLA) have rallied by nearly 48% over the past month despite the company reporting a drop in its Q2 vehicle production and deliveries. This prompted Bill Gross, the co-founder of PIMCO, to compare Tesla’s price movements to meme stocks.
Tesla’s Q2 Deliveries
While Tesla’s Q2 deliveries declined by 4.8% year-over-year to roughly 444 thousand, the figure came in better than analysts’ expectations. The ensuing quick rally in the company’s share price resulted in sharp losses for short sellers.
Tesla’s Shrinking EV Market Share
Tesla’s dominance in the U.S. electric vehicle market took a hit in the second quarter of the year, falling below 50 percent for the first time. Estimates from Cox Automotive show Tesla’s market share dropped to 49.7 percent from 59.3 percent a year earlier. This decline comes as other major carmakers like General Motors, Ford, Hyundai, and Kia ramp up their own electric vehicle offerings, posing more competition. It signals a shift in the market as more car buyers choose from a wider range of electric vehicle options.
Tesla – a Meme Stock?
Bill Gross, a legend in the bond market, noted that the upward price action despite sagging fundamentals has left Tesla shares behaving like a meme stock. But then, Tesla is not just an EV play anymore, and there are other factors in play.
Some of these, such as robotaxis, AI, and humanoid robots, are only beginning to take shape. Retail investors, in particular, are betting on Tesla’s long-term prospects. According to Reuters, Musk expects nearly a billion humanoids to roam this planet in the 2040s. Earlier, Musk commented that Tesla’s Optimus robot could propel the company’s valuation to as much as $25 trillion. He expects the new design for Optimus to be completed later this year.
Today, Morgan Stanley’s Adam Jonas reiterated a Buy rating on Tesla alongside a $310 price target. This points to a nearly 18.2% potential upside in the stock. Nonetheless, concerns over Tesla losing market share in the EV business remain.
Is TSLA a Buy, Sell, or Hold?
Consequently, the Street has a Hold consensus rating on Tesla, alongside an average TSLA price target of $184.50. The stock is currently trading at a price-to-earnings multiple of 64.3x.
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