Bears were out for Tesla (NASDAQ:TSLA) at the start of the year, seizing on the negative narrative engulfing the struggling EV space. More specifically, Tesla itself has been under pressure due to waning demand and shrinking margins. But more recently, there has been a sentiment shift around the stock.
Up by an impressive 74% over the past 3 months, the gains are indicative of improving fundamentals, says Wedbush analyst and TSLA bull, Daniel Ives.
“We believe the Tesla demand story has made a shift for the positive after a rough last 6-9 months with stronger than expected 2Q deliveries earlier this month marking a major ‘turning point’ in the Tesla bull case story looking ahead into 2H24/2025,” Ives explained.
Ives comments come ahead of the EV leader’s Q2 earnings, which will take place once the bell rings to bring today’s (Tuesday) market action to a close.
Auto gross margins (ex credits) will be under the spotlight with Ives believing the 16.5%-17% range “would be the sweet spot.” As the series of price cuts now seem to be mostly done and with price hikes seen in some regions/models seen recently, this period should represent the “beginning of an upward climb into the next few quarters.”
Key items to look out for on the earnings call will be the overall demand situation, China’s growth in a “competitive/price cut backdrop,” and what Tesla expects for the rest of the year.
Given Elon Musk’s very public endorsement of Trump, with Kamala Harris now most likely the Democrats’ nominee, Ives also thinks CEO Elon Musk will address the US Presidential Election on the earnings call. While the analyst thinks a Trump win will be bad news for the EV industry, it would be a “positive for Tesla as removing the tax rebates/incentives would give Musk and Tesla an advantage.”
“On the other hand,” Ives goes on to say, “a Harris ticket would be a positive for Detroit (GM, Ford, Stellantis) and the EV industry and in theory also help Tesla, although this all remains up for debate among investors.”
To this end, ahead of the print, Ives rates Tesla shares an Outperform (i.e., Buy), backed by a $300 price target. The figure implies the stock will post growth of 21% in the months ahead. (To watch Ives’ track record, click here)
That’s the bullish take but the Street’s overall position is not quite as optimistic. Tesla stock only claims a Hold (i.e. Neutral) consensus view, a rating based on 13 Buys and Holds, each, plus 9 Sells. Additionally, over the next year, shares are expected to shed ~22% of their value, considering the average target stands at $193.18. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
