Tesla shares could test their extraordinary summer run Wednesday, but a key Wall Street analyst sees the potential for further gains even as he cautions that its second quarter earnings could challenge the stock's "complicated balance" between its EV and AI ambitions.
Tesla (TSLA) has surged more than 36% over the past month, adding nearly $240 billion and nudging into positive territory for the year in part tied to investors' bets that the group's transition into autonomous driving and AI-powered technologies will offset the recent slump in demand for global EVs, which is pressuring sales and eroding profit margins.
The stock was also boosted by stronger-than-expected second-quarter deliveries, which saw Tesla shift 443,956 new cars over the three months ended in June despite big declines in key markets like China and Europe.
Related: Tesla Q2 deliveries surprise sends stock soaring despite China slump
Tesla will report for Q2 after the close of trading July 23, with analysts expecting a bottom line of 62 cents a share on revenue of around $24.72 billion.
Barclays analyst Dan Levy, who lifted his Tesla price target by $45 to $225 a share in a note published Wednesday, says the report could blunt the stock's recent surge.
"Tesla has a clear lead in both the global EV transition and the emergence of the software-defined vehicle, along with a positive trajectory on volume, positioning it well in the long term," Levy and his team wrote. "However, we believe near-term headwinds for the stock are being overlooked amid the recent rally."
Levy sees Tesla's gross-profit margin, one of Wall Street's key performance metrics for the group, thinning to 16% amid the ongoing EV-price war. But the analyst suggests that "record 2Q energy deployments and improving margins might offset some auto weaknesses."
Alongside its EV-sales data, Tesla said it deployed around 9.4 gigawatt hours of energy-storage products over the three months ended in June, a figure more than double the record tally of 4.1 GWh reported over Q1.
Still, Levy suggests that "fundamentals may pressure the stock temporarily, despite Tesla’s strong position in the EV transition and software-defined vehicle market."
Tesla: Robotaxi delay?
Tesla CEO Elon Musk in fact hinted that recent reports suggesting the group's highly anticipated robotaxi unveiling, originally set for Aug. 8, would likely be delayed until at least October.
Musk said he'd "requested what I think is an important design change to the front, and extra time allows us to show off a few other things" during a discussion on the event's timing on his X social-media platform.
Related: Analysts reset Tesla stock price targets as robotaxi event looms
In the spring Musk won shareholder approval for a long-delayed compensation package, agreed in 2018 but rejected by a Delaware judge last year, that will pay him around $55.8 billion.
The move gives Musk more leverage in his effort to seize further control of the carmaker, a move he has said is crucial to developing his AI ambitions. Without that support, and without the ability to own around 25% of Tesla shares, Musk has said he would look to expand his AI plans outside the Tesla structure.
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"While we appreciate the potentially disruptive opportunity from these businesses, we believe they cast uncertainty on the path ahead for Tesla, making success of the stock dependent on bets with seemingly binary outcomes," the analyst said, calling it a "complicated balance."
"Given these factors, we remain cautious and maintain an equal-weight rating, noting the need for potential midterm estimate cuts on weaker volumes and considerable uncertainty regarding when fundamentals will improve," Levy wrote.
Tesla shares were marked 0.21% higher in early Wednesday trading to change hands at $257.56 each.
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