Tesla’s competition is tougher than ever. But the company’s stock price has risen sharply, erasing losses so far this year, and that hasn’t yet calmed questions about whether the company still deserves to be included in the “Magnificent Seven,” a movie-inspired term for the tech giants (the others being Alphabet, Amazon, Apple, Meta, Microsoft and Nvidia) that are responsible for most of the stock market’s recent gains.
But when Tesla’s stock price tumbled to $138.80 in April, it barely managed to hang on to the list of the top 10 largest companies in the U.S., and commentators like CNBC’s Jim Cramer were already declaring the company had lost its place among the most powerful and fastest-growing companies in America.
But Tesla’s big rally continued on Wednesday, with its shares trading at their highest since September, closing at $263.26, after second-quarter deliveries beat low-level expectations. Tesla’s market capitalization is now approaching $850 billion, making it the eighth-largest U.S. company but still well behind Meta’s $1.3 trillion market capitalization, the next smallest of the Magnificent Seven.
As luckAs Christian Hetzner of Yahoo! pointed out earlier this week, Tesla bulls may see the company as an artificial intelligence company, but at this point it still needs to prove it can sell cars. However, this assertion may be called into question given that The New York Times, citing Cox Automotive, reported that Tesla no longer controls a majority of the U.S. EV market.
“The tech giant is looking to take a more aggressive stance on the stock market,” said Seth Goldstein, equity strategist at Morningstar. luck He never thought focusing on Tesla’s EV market share was a good idea, pointing out that as overall demand for electric vehicles increases, Tesla’s market share is bound to decline even as the company continues to grow.
“I think the more important numbers are the volume of vehicles they deliver and their percentage of the total auto market, including internal combustion engines,” Goldstein said.
Tesla deliveries exceed expectations
Earlier this month, Tesla said it delivered about 444,000 vehicles in the second quarter, down just under 5% from last year. As Hetzner noted last week, analysts had expected the decline to be about 9%.
The numbers impressed Goldstein, but so did record numbers from Tesla’s energy storage business: The company said it deployed 9.4 gigawatt-hours of battery energy storage, its most ever for a quarter and more than double the amount reported in the first quarter.Goldstein said even small changes in expectations for high-growth stocks can have a big impact on stock prices.
“This shows that Tesla can still grow,” Goldstein said. “It may be a sign that the worst is over for Tesla and things are looking up.”
Stay tuned for news on robotaxis and affordable vehicles
Investors might also be looking forward to Aug. 8, when Tesla is scheduled to unveil its Cybercab, a robot taxi model that is expected to have no steering wheel or pedals. Goldstein is interested to see whether the announcement will provide a specific timeline or offer few details.
Goldstein said he hopes to hear more about the progress of building the new, more affordable vehicle in the near future during Tesla’s next earnings call on July 23. Musk has said production could begin as early as 2025, which Goldstein said would allow deliveries to start increasing again by 2026.
He believes the market will react favorably if that timeline is maintained.
“If they don’t recommit or provide some sort of update, the stock price could fall,” he said.
