Tesla’s stock has surged recently due to several positive developments. In Q2 2024, Tesla delivered 443,956 vehicles, exceeding analyst expectations, and deployed a record 9.4 gigawatt-hours of energy storage products.

Anticipation around Tesla’s upcoming robotaxi plans and potential margin stabilization has further boosted investor confidence. Analysts have upgraded their price targets, and the overall positive market sentiment towards tech stocks has contributed to Tesla’s rally.

Despite past underperformance, Tesla’s stock has rebounded, reflecting renewed optimism.

Tesla’s energy business, showing strong growth and profitability, is increasingly seen as a significant earnings driver, potentially surpassing automotive margins. The global energy storage market is also projected to grow substantially, further supporting Tesla’s prospects.

Better-than-Expected Q2 Deliveries

One of the primary drivers of Tesla’s stock rally has been its better-than-expected vehicle deliveries in Q2 2024. Tesla reported 443,956 vehicle deliveries, surpassing analyst estimates of 439,000. This performance is particularly noteworthy as it follows two consecutive quarters of declining deliveries. The positive delivery numbers have rekindled investor confidence in Tesla’s ability to meet market demand and maintain its growth trajectory.

Record Growth in Energy Storage

Tesla’s energy storage business has also played a significant role in the recent stock rally. The company deployed a record 9.4 gigawatt-hours (GWh) of energy storage products in Q2, more than doubling its previous high. This strong performance in the energy segment has led some analysts to increase their valuation of Tesla’s energy business, recognizing it as a major earnings driver for the company.

Revenue and Profitability Boost

Based on Tesla’s typical revenue of about $400 million per 1 GWh of energy storage deployed, the Q2 deployment could translate to approximately $3.7 billion in revenue for the energy business. This represents a significant increase from the $1.6 billion in energy storage revenue reported in Q1 2024. Additionally, Tesla’s energy storage division achieved a gross profitIn the world of finance and accounting, the term "gross profit" holds significant importance as it provides a fundamental snapshot of a company's financial health. Also known as gr... More of $403 million in Q1 2024, with a healthy gross marginGross margin is a critical financial metric that plays a pivotal role in evaluating a company's financial health and profitability. It is a percentage that indicates how efficientl... More of 24.6%. This profitability contrasts with the slight decline in Tesla’s overall gross margin, making the energy business an attractive segment for investors.

Anticipation of Robotaxi Unveiling

Tesla’s upcoming unveiling of its robotaxi plans on August 8, 2024, is another catalystA stock catalyst is an engine that will drive your stock either up or down. A catalyst could be news of a new contract, SEC filings, earnings and revenue beats, merger and acquisit... More driving the stock’s momentum. Investors and analysts view this as a significant expansion into AI and autonomous driving technology, areas where Tesla has been investing heavily. The anticipation of the robotaxi announcement has generated excitement and optimism about Tesla’s future growth prospects in the autonomous vehicle market.

Margin Stabilization Expectations

While Tesla’s margins declined in Q1 due to price cuts, investors are looking for signs of stabilization or improvement in the upcoming Q2 earnings report on July 23. Any indication of margin recovery could further bolster investor confidence and support the stock’s upward trajectory.

Analyst Upgrades and Market Sentiment

Several analysts have raised their price targets for Tesla stock, contributing to the positive market sentiment. For example, Goldman Sachs increased its target from $175 to $248. The overall positive sentiment in the stock market, particularly towards tech and growth stocks, has also played a role in Tesla’s rally. The rebound from previous lows earlier in the year has made Tesla stock attractive to some investors at lower prices.

Tesla’s Market Capitalization and Stock Performance

As of July 13, 2024, Tesla’s market capitalization stood at $791.65 billion, with the stock price at $248.23 on July 12. The stock has gained approximately 51% in the past 30 days, reflecting the strong momentum and renewed investor optimism. However, it is important to note that Tesla’s stock remains volatile and subject to various factors, including competition in the EV market, global economic conditions, and the company’s ability to execute its ambitious plans in autonomous driving and energy storage.

The Growth of Tesla’s Energy Business

Tesla’s energy business is increasingly contributing to investor optimism and potentially becoming a major earnings driver for the company. The recent record-breaking deployment of 9.4 GWh of energy storage products in Q2 2024 has caught the attention of investors and analysts alike. This deployment significantly boosts Tesla’s revenue and highlights the profitability of its energy storage division.

Future Growth Potential and Market Projections

Analysts predict increased energy demand due to the rise of generative AI and data centers, positioning Tesla’s energy storage division to capitalize on these developments. Some analysts project that Tesla Energy margins will surpass the company’s auto margins in 2024, potentially generating $2.00 in earnings per shareEarnings per share (EPS) is a fundamental financial metric that provides valuable insights into a company's profitability. This widely used indicator helps investors and analysts g... More by 2030. The strong performance of the energy business helps Tesla diversify its revenue streams beyond its automotive segment, which has faced challenges such as declining deliveries year-over-year.

Global Energy Storage Market Growth

The global energy storage market is forecasted to grow significantly over the next several years. The market is projected to reach over $1.4 trillion by 2031, growing from $256 billion in 2023, with a compound annual growth rateThe world of finance is replete with complex concepts, but one that stands as a cornerstone for investors seeking to gauge returns is the Compound Annual Growth Rate (CAGR). Often ... More of approximately 9% between 2024 and 2031. The battery energy storage market specifically is estimated to grow from $7.8 billion in 2024 to $25.6 billion by 2029.

In terms of capacity, energy storage installations worldwide are projected to reach a cumulative 411 gigawatts (GW), or 1,194 gigawatt-hours (GWh), by the end of 2030. This represents a 15-fold increase from the 27 GW/56 GWh of storage that was online at the end of 2021. An estimated 387 GW/1,143 GWh of new energy storage capacity is expected to be added globally from 2022 to 2030. The United States and China are forecasted to remain the two largest markets, representing over half of global storage installations by the end of the decade, with Europe also expected to see significant growth.

Key Drivers for Energy Storage Market Growth

Several key drivers are propelling the growth of the global energy storage market, including:

• Declining technology costs
• Supportive policies like the US Inflation Reduction Act and Europe’s REPowerEU plan
• Increasing electricity prices and grid demand charges
• Growing need for grid stability and reliability as more renewable energy sources are integrated
• Expanding corporate demand for energy storage solutions

Insights

1. Tesla’s Q2 vehicle deliveries exceeded expectations.
2. Record energy storage deployment highlights growth potential.
3. Anticipated robotaxi plans are seen as a major catalyst.
4. Analyst upgrades reflect increased confidence in Tesla.
5. The energy business diversifies Tesla’s revenue streams.

The Essence (80/20)The Origins and Evolution of the 80/20 Principle The Discovery by Vilfredo Pareto In 1897, Italian economist Vilfredo Pareto uncovered a striking pattern in his study of wealth and... More

Core Topics for Comprehensive Understanding:

1. Q2 Deliveries: Surpassing expectations with 443,956 vehicles, boosting investor confidence after previous declines.
2. Energy Storage Growth: Record deployment of 9.4 GWh in Q2, significantly enhancing Tesla’s valuation in the energy sector.
3. Robotaxi Anticipation: Upcoming plans for robotaxis on August 8, 2024, seen as a pivotal move into AI and autonomous driving.
4. Market Sentiment and Analyst Upgrades: Positive sentiment towards tech stocks and upgraded price targets from analysts.
5. Energy Market Growth: The global energy storage market is forecasted to grow significantly, positioning Tesla to capitalize on this trend.

The Guerilla Stock Trading Action Plan

1. Monitor Q2 Earnings Report (July 23): Focus on margin trends and overall financial health.
2. Evaluate Robotaxi Unveiling (August 8): Assess the impact of the robotaxi plans on Tesla’s market position.
3. Track Energy Storage Progress: Follow updates on energy storage deployment and profitability to gauge future performance.
4. Analyze Analyst Reports: Consider the reasons behind upgraded price targets and long-term stock predictions.
5. Research Market Trends: Stay informed about the global energy storage market and Tesla’s positioning within it.

Blind Spots

Potential Overlooked Detail: The competitive landscape in the EV and energy storage markets. Tesla’s ability to maintain its lead amidst growing competition from other automakers and energy companies could be a critical factor that investors might underestimate.

Regulatory and Policy Changes: Tesla’s operations and profitability are highly influenced by regulatory environments and policies, particularly those related to environmental regulations, subsidies, and incentives for electric vehicles and renewable energy. Changes in these policies could significantly impact Tesla’s business model and financial performance. Investors might overlook the potential risks associated with shifts in government policies or the introduction of new regulations that could affect production costs, sales, and market expansion. Furthermore, Elon Musk has stirred controversy by transforming Twitter/X into a free speech platform, drawing the ire of socialist-leaning governments in both the U.S. and the EU. These adversarial administrations seem to be targeting Musk’s enterprises with a barrage of lawsuits, fines, and various regulatory actions.

Supply Chain and Production Challenges: Tesla’s ambitious plans for scaling its vehicle and energy storage production depend heavily on a stable and efficient supply chain. Disruptions in the supply chain, such as shortages of critical components (like semiconductors and batteries), logistical issues, or increased raw material costs, could hamper Tesla’s ability to meet its production targets and delivery timelines. Additionally, the complexity of scaling production while maintaining quality and managing costs is a significant challenge that might not be fully appreciated by investors.

TSLA Technical Analysis

The chart of Tesla Inc (TSLA) as of July 12, 2024, indicates several key technical patterns and indicators:

Price Movement: The stock has experienced a recent upward trend, with the price moving from around $150 in late April to $248.23. It is currently above both the 50-day moving average (195.20) and the 200-day moving average (209.38). This indicates a bullish sentiment as the price is trending above key moving averages.

Volume: The trading volume shows significant spikes, suggesting strong buying interest, especially during upward price movements. High volume on up days indicates strong accumulation.

Relative Strength IndexIn the world of technical analysis, the Relative Strength Index (RSI) stands as a cornerstone tool for traders seeking insights into market momentum. Developed by J. Welles Wilder ... More (RSI): The RSI is at 69.30, which is near the overbought territory (above 70). This suggests that the stock might be overbought and could be due for a pullback or consolidation.

On Balance VolumeThe On Balance Volume indicator (OBV) is a technical analysis tool used to measure the flow of money into and out of a security over a specified period of time. It is a cumulative ... More (OBV): The OBV is rising, which confirms the upward price trend. A rising OBV suggests that volume is heavier on up days, indicating strong buying pressure.

Stochastic RSIIn the realm of technical analysis, the Stochastic RSI (StochRSI) emerges as a powerful tool for traders seeking to navigate market dynamics with precision. Developed by Tushar S. ... More: The Stochastic RSI is at 0.493, which is in the mid-range. This implies that the stock is neither overbought nor oversold, indicating a neutral position in the short term.

Average Directional IndexThe Average Directional Index (ADX) stands as a cornerstone indicator in the toolkit of technical traders, offering insights into the strength of market trends. Developed by Welles... More (ADX): The ADX is at 42.64, indicating a strong trend. Values above 25 suggest a strong trend, and given the current ADX, the trend is strong and likely to continue.

Chaikin OscillatorNamed after its creator Marc Chaikin, the Chaikin Oscillator stands as a formidable tool in the arsenal of technical analysts. This oscillator is designed to measure the accumulati... More: The Chaikin Oscillator is positive at 114,821,500, indicating strong accumulation and buying pressure.

Time-Frame Signals:

• 3-Month Horizon: Hold. Given the current upward trend and positive indicators, holding the stock could be beneficial. However, the RSI suggests potential overbought conditions, so monitoring for a pullback is advised.
• 6-Month Horizon: Buy. The overall trend is strong, supported by moving averages and volume indicators. The stock shows potential for continued upward movement.
• 12-Month Horizon: Buy. The long-term indicators, including the ADX and moving averages, suggest a sustained upward trend. Holding for a year could yield positive returns.

Remember, past performance is not an indication of future results. Always conduct your own research and consider consulting with a financial advisor before making any investment decisions 🧡

Looking Ahead

The growth in Tesla’s energy business is providing a new narrative for investors, shifting focus from the company’s automotive segment and highlighting its potential as a comprehensive energy solutions provider. This diversification and growth potential are significant contributing factors to the recent surge in Tesla’s stock price, underscoring the company’s strategic positioning for future success.

Tesla Stock FAQ