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Tesla Stock Surges on Cybertruck Launch, Model 3 Refresh
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Shares of Tesla (TSLA - Free Report) bounced back to start the week following six consecutive losses, as fears of declining margins were outweighed by positive developments including the launch of the highly-anticipated Cybertruck.
Tesla stock finished Monday’s session up more than 7% after Baird analyst Ben Kallo highlighted several potential catalysts that bode well for the electric vehicle (EV) maker. Cybertruck production has begun ahead of a presumed Q3 delivery event. With up to 3,500 pounds of payload capacity and adjustable air suspension, Tesla is touting the Cybertruck as its “most powerful tool we have ever built.”
Sightings of Cybertrucks around the world have also been adding to the excitement. Social media users noted that the new vehicle has been spotted on a glacier in Iceland, in what appears to be a promotional reel ahead of the launch. Others have released photographs showing Cybertrucks driving near the company’s Fremont and Austin facilities.
Numerous Tesla fans have also been eagerly awaiting the release of an updated Model 3, which is codenamed project Highland. Amid recent price cuts and incentives for current models, anticipation has been building for the upcoming Model 3 refresh. Reports out of China suggest that preorders have already begun at choice Beijing showrooms.
Tesla Stock Performance
Shares rose another 4% in pre-market trading Tuesday morning. Tesla, currently a Zacks Rank #3 (Hold), started the year off on a hot streak. After bottoming out at the end of the first trading week of 2023, TSLA stock more than doubled in price in just over a month. Shares then entered a consolidation phase until the beginning of May, when the next leg up saw shares nearly double again into mid-July.
Image Source: StockCharts
Following the latest earnings report, declining margins concerned investors, prompting a selloff that sent TSLA shares into a bear market (more than -20% off the most recent high). Still, the stock remains up nearly 90% on the year and above its 200-day moving average (red line). TSLA shares appear to have found support at a prior breakout level (green dotted line). Monday’s climb of more than 7% on above-average volume has the bulls knocking on the door once again.
Tesla is part of the Zacks Automotive – Domestic industry group, which currently ranks in the top 28% out of approximately 250 industries. Because this group is ranked in the top half of all Zacks Ranked Industries, we expect it to outperform the market over the next 3 to 6 months. Quantitative research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping.
Recent Earnings and Future Estimates
Tesla has exceeded earnings estimates in each of the past four quarters, with an average earnings surprise of 7.94% over that timeframe. The company most recently reported second-quarter earnings results back in July of $0.91/share, a 9.64% beat over the $0.83/share consensus estimate.
The EV giant witnessed record production, deliveries, and revenues during the quarter. Sales rose 47% year-over-year in Q2, with vehicle deliveries increasing 83%.
Despite the seemingly solid results, Tesla’s operating margins dipped to single digits in Q2, coming in at 9.6% - the lowest level in the last five quarters. Higher costs involved in the scaling of the production of new battery cells, the Cybertruck, and other large projects contributed to the decline.
For the current quarter, analysts covering Tesla have slashed earnings estimates by -5.95% in the past 30 days. The Q3 Zacks Consensus EPS Estimate now stands at $0.79/share, which would translate to negative growth of -24.76% versus the same quarter last year.
Image Source: Zacks Investment Research
Final Thoughts
Tesla bulls are less concerned about current margin trends and are more focused on Tesla’s potential to evolve into an artificial intelligence (AI) leader. The company’s AI supercomputer (Dojo) is helping Tesla to bring Full Self-Driving (FSD) vehicles to mainstream driving environments. The software has witnessed some major improvements in recent months, potentially paving the way for Tesla to introduce a global robotaxi fleet.
The market has rewarded TSLA shareholders over the long-term. This recent correction is offering potential buyers an attractive entry point. Tesla CEO Elon Musk has always had plenty of doubters, but they have mainly been proven wrong. And with AI initiatives coming to the forefront this year, there’s reason to believe more upside may lie ahead for Tesla stock.
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Tesla Stock Surges on Cybertruck Launch, Model 3 Refresh
Shares of Tesla (TSLA - Free Report) bounced back to start the week following six consecutive losses, as fears of declining margins were outweighed by positive developments including the launch of the highly-anticipated Cybertruck.
Tesla stock finished Monday’s session up more than 7% after Baird analyst Ben Kallo highlighted several potential catalysts that bode well for the electric vehicle (EV) maker. Cybertruck production has begun ahead of a presumed Q3 delivery event. With up to 3,500 pounds of payload capacity and adjustable air suspension, Tesla is touting the Cybertruck as its “most powerful tool we have ever built.”
Sightings of Cybertrucks around the world have also been adding to the excitement. Social media users noted that the new vehicle has been spotted on a glacier in Iceland, in what appears to be a promotional reel ahead of the launch. Others have released photographs showing Cybertrucks driving near the company’s Fremont and Austin facilities.
Numerous Tesla fans have also been eagerly awaiting the release of an updated Model 3, which is codenamed project Highland. Amid recent price cuts and incentives for current models, anticipation has been building for the upcoming Model 3 refresh. Reports out of China suggest that preorders have already begun at choice Beijing showrooms.
Tesla Stock Performance
Shares rose another 4% in pre-market trading Tuesday morning. Tesla, currently a Zacks Rank #3 (Hold), started the year off on a hot streak. After bottoming out at the end of the first trading week of 2023, TSLA stock more than doubled in price in just over a month. Shares then entered a consolidation phase until the beginning of May, when the next leg up saw shares nearly double again into mid-July.
Image Source: StockCharts
Following the latest earnings report, declining margins concerned investors, prompting a selloff that sent TSLA shares into a bear market (more than -20% off the most recent high). Still, the stock remains up nearly 90% on the year and above its 200-day moving average (red line). TSLA shares appear to have found support at a prior breakout level (green dotted line). Monday’s climb of more than 7% on above-average volume has the bulls knocking on the door once again.
Tesla is part of the Zacks Automotive – Domestic industry group, which currently ranks in the top 28% out of approximately 250 industries. Because this group is ranked in the top half of all Zacks Ranked Industries, we expect it to outperform the market over the next 3 to 6 months. Quantitative research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping.
Recent Earnings and Future Estimates
Tesla has exceeded earnings estimates in each of the past four quarters, with an average earnings surprise of 7.94% over that timeframe. The company most recently reported second-quarter earnings results back in July of $0.91/share, a 9.64% beat over the $0.83/share consensus estimate.
The EV giant witnessed record production, deliveries, and revenues during the quarter. Sales rose 47% year-over-year in Q2, with vehicle deliveries increasing 83%.
Despite the seemingly solid results, Tesla’s operating margins dipped to single digits in Q2, coming in at 9.6% - the lowest level in the last five quarters. Higher costs involved in the scaling of the production of new battery cells, the Cybertruck, and other large projects contributed to the decline.
For the current quarter, analysts covering Tesla have slashed earnings estimates by -5.95% in the past 30 days. The Q3 Zacks Consensus EPS Estimate now stands at $0.79/share, which would translate to negative growth of -24.76% versus the same quarter last year.
Image Source: Zacks Investment Research
Final Thoughts
Tesla bulls are less concerned about current margin trends and are more focused on Tesla’s potential to evolve into an artificial intelligence (AI) leader. The company’s AI supercomputer (Dojo) is helping Tesla to bring Full Self-Driving (FSD) vehicles to mainstream driving environments. The software has witnessed some major improvements in recent months, potentially paving the way for Tesla to introduce a global robotaxi fleet.
The market has rewarded TSLA shareholders over the long-term. This recent correction is offering potential buyers an attractive entry point. Tesla CEO Elon Musk has always had plenty of doubters, but they have mainly been proven wrong. And with AI initiatives coming to the forefront this year, there’s reason to believe more upside may lie ahead for Tesla stock.