Despite the recent turbulent times experienced by the electric vehicle (EV) behemoth Tesla Inc. TSLA, a new chapter appears to be unfolding. The company’s stock, which was previously bogged down by margin pressures and fierce competition, has surged impressively by 44.7% over the past month (as of Jul 5, 2024), now resting comfortably near a six-month high.

While Tesla shares faced a 6.7% slump over the past year, even claiming a spot among the S&P 500’s worst-performing stocks, a newfound narrative is beginning to emerge. The burning question on investors’ minds now is whether it’s time to seize the Tesla opportunity.

Let’s embark on a deeper exploration.

Tesla Sets New Q2 Delivery Record

Early in July, Tesla reported deliveries for the second quarter of 2024 that exceeded expectations. These robust figures signal a rise in demand, potentially alleviating concerns surrounding inventory levels of its flagship Model 3/Y (read: Tap Tesla’s Better-Than-Expected Q2 Deliveries With These ETFs).

The leading electric car manufacturer dispatched 443,956 vehicles globally in the second quarter of 2024, comprising 422,405 Model 3/Y units and 21,551 other models. Although a 4.8% dip from the prior year, the delivery numbers outperformed the anticipated 436,000 units.

This drop in yearly sales echoes the mounting competition in the electric vehicle market, where sales are evolving at a slower pace. Investors now demand heightened profitability on each sale, spurring Tesla to produce 410,831 vehicles during the quarter.

Tesla’s Foray Into AI Regime

Transitioning from an automotive to a technology and robotics outfit, Tesla is accelerating this shift through artificial intelligence (AI) and autonomous driving technologies. The company is strategically banking on driverless software and AI innovations to reinvigorate its sales.

On August 8, Tesla is slated to unveil “robotaxis,” an autonomous vehicle sans steering wheel or pedals, perceived as pivotal to the electric automaker’s sustenance amidst intensifying competition in the EV domain.

Back in late April, Tesla’s CEO Elon Musk disclosed plans to invest roughly $10 billion this year in AI training and inference. The company’s robust focus on AI and autonomous driving is deemed potentially game-changing amid the current AI zeitgeist.

Tesla Awaiting Improved Profit Margins?

Analysts, such as Morningstar Inc.’s Seth Goldstein, anticipate enhanced profit margins for Tesla due to reduced production and raw material costs, as reported by Bloomberg. Goldstein foresees a “return to profit growth” by the upcoming year.

Projections indicate a 35.08% growth for Tesla next year, surpassing the 24.50% foresight for the Automotive – Domestic industry and the 9.31% outlook for the S&P 500. Looking ahead over the next five years, Tesla is anticipated to achieve a growth rate of 21.60%, outshining the underlying industry’s 15.40% rate of growth.

EV Space Gaining Gradual Momentum

The first quarter of 2024 saw a robust 25% year-over-year increase in electric car sales. Historically, first-quarter electric vehicle sales have constituted 15-20% of the total annual global sales since 2021, as per IEA data.

Most of this growth stemmed from China in the first quarter this year, with Chinese EV sales projected to surge by nearly 25% in 2024, followed closely by a 20% upturn in the United States, based on IEA insights.

Significantly, the most notable growth in relative terms was witnessed outside established EV markets in the first quarter, where sales soared by over 50%, indicating a swift global shift towards electromobility.

IEA is now anticipating a 20% year-over-year surge in 2024 EV sales, with EVs projected to capture over one-fifth of total car sales globally.

Any Wall of Worry?

Potential political ramifications, such as policy shifts under a potential Trump administration resurgence, inject uncertainty into the EV market. As Trump fosters fossil fuel promotion, along with Tesla’s Cybertruck – the company’s first new consumer model in years – encountering tepid traction, challenges loom.

The Bloomberg Electric Vehicles Price Return Index illuminates the tumultuous year confronting EV stocks, as manufacturers grapple with funding crises. Some analysts and fund managers advocate for industry consolidation and enhanced profitability as prerequisites for sector stabilization, per a Bloomberg exposé.

Yet, Trump’s history of tariff confrontations with China raises the specter of substantial tariffs on Chinese EV players in the event of his re-election, potentially favoring Tesla in the global EV landscape.

What Do Technical Indicators Say?

Recent developments show Tesla’s 14 Day SMA surpassing its 50 Day SMA, indicating short-term bullishness. Additionally, the company’s Parabolic SAR exhibits positive readings, fortifying its short-term uptrend.

However, caution is advised for the long haul, as Tesla’s relative strength index hovers around 80, depicting an overbought status. While Tesla presents an enticing short-term opportunity, the long-term narrative requires further unfolding. Currently sporting a Zacks Rank #3 (Hold), Tesla’s trajectory remains under the microscope.

Image Source: Zacks Investment Research

ETFs in Focus

Venturing to capitalize on the short-term uptrend in Tesla, investors may opt for ETFs with significant exposure to this luxury automaker. By leveraging the ETF approach, investors can mitigate specific company concentration risks. Notable ETFs include Direxion Daily TSLA Bull 1.5X Shares TSLL, MeetKevin Pricing Power ETF PP, Consumer Discretionary Select Sector SPDR Fund XLY, Simplify Volt Robocar Disruption and Tech ETF VCAR, and ARK Innovation ETF ARKK.

Zacks Names “Single Best Pick to Double”

From a pool of thousands, 5 Zacks experts each earmark their top choice, poised to skyrocket by over 100% in the upcoming months. Director of Research Sheraz Mian cherry-picks a little-known chemical firm that has already surged 65% over the last year, while sustaining an attractively affordable valuation. With escalating demand, soaring 2022 earnings projections, and a $1.5 billion share repurchase plan, retail investors could seize the moment soon.

This contender is primed to challenge or surpass recent Zacks’ Stocks Set to Double standouts like Boston Beer Company, which soared +143.0% in slightly over 9 months, and NVIDIA, which skyrocketed +175.9% within a year.

Exploring Tesla’s Impact on the ETF Market

Investors seeking exposure to Tesla, Inc. (TSLA) and its innovative disruptions often turn to ETFs tailored to capture its unique market presence. These investment vehicles strive to mimic Tesla’s trajectory, showcasing both the company’s meteoric rise and sudden plunges.

The Rise of Tesla ETFs

In recent years, Tesla’s influence on the financial markets has been profound. Its distinction as a tech disruptor with global appeal has paved the way for a surge in Tesla-themed ETFs, giving investors a chance to capitalize on the company’s successes and challenges from a diversified standpoint. These ETFs selectively craft portfolios designed to leverage Tesla’s performance in the ever-changing market environment.

Market Predictions and Momentum Maintenance

The ongoing dialogue surrounding Tesla ETFs focuses on their ability to maintain momentum during volatile market conditions. As with any investment tied to a single stock, Tesla ETFs face the challenge of adapting to the company’s rollercoaster performance. Can these ETFs sustain their newfound winning streak or will they succumb to the pressures of the market? This question remains a poignant one for investors.

Strategic Investment Decisions

As investors navigate the intricate landscape of Tesla ETFs, strategic decisions become imperative. Understanding the dynamics of ETF movements and Tesla’s impact on these vehicles can be instrumental in crafting a diversified investment portfolio. The risks and rewards associated with Tesla ETFs demand thorough consideration before committing capital.

Conclusion

In conclusion, the intersection of Tesla’s market influence and ETF investment vehicles presents a unique opportunity for investors looking to align their portfolios with the trajectory of this tech giant. Keeping a keen eye on market predictions and maintaining informed decision-making processes are crucial elements in successfully navigating the current landscape of Tesla ETFs.