Tesla (NASDAQ:TSLA) has gone up by nearly 50% over the past month. While some of this latest Tesla stock rally is on the heels of a well-received deliveries report, another factor has played a big role.
That would be speculative hype regarding the company’s potential AI and Robotaxi catalysts. With this, investing legend Bill Gross is right on the money, with his recent argument that Tesla is “acting like a meme stock” at this moment.
In the immediate-term, this “meme mania” for Tesla could continue. Instead of “buying on the rumor, selling on the news,” the market could do the opposite, following two upcoming major events for the company.
However, make no mistake. It’s a matter of when, not if, the chickens come home to roost, with this sputtering EV play masquerading as an AI stock.
Tesla Stock and Recent Moonshot Moves
At the start of this month, Tesla released its delivery numbers for the preceding quarter. For the quarter ending June 30, 2024, Tesla reported 443,956 vehicle deliveries. This figure came in ahead of both management and sell-side forecasts. Moreover, this delivery figure was greater than the number of vehicles produced during the quarter.
Although deliveries fell by 4.8% compared to the prior year’s quarter, investors were more than satisfied with these “better than feared” results. Besides assuaging concerns about soft demand and a possible “Tesla glut,” these numbers have also helped the market get a better idea of the company’s likely fiscal performance last quarter.
Because of this, the company may be in a position to again deliver “better than feared” results and guidance in its upcoming quarterly earnings release, scheduled for July 23.
With lowered concerns about a surprise earnings miss later this month, speculators have been even more emboldened to bid up Tesla stock, ahead of further updates on the company’s non-EV endeavors.
These include Tesla’s Optimus humanoid robot project and the Robotaxi project. As you likely know, Tesla has a Robotaxi event scheduled to happen less than a month from now.
The Latest Hype Will Only Last for So Long
Admittedly, just like how “better-than-feared” earnings could spark yet another wave of “buy the rumor, buy more on the news” for Tesla stock, the same could occur following Tesla’s Robotaxi unveiling on Aug. 8. Then again, maybe not.
After all, so many have cycled back into TSLA over the past few weeks. Chances are, for the most short-term of reasons. Irrespective of whether Elon Musk wows or disappoints the public four weeks from now, investors riding the aforementioned “meme wave” could decide at that point to cash in their chips.
Even if a post-event sell-off doesn’t happen, and the rally persists through the rest of summer, keep in mind that this stock has not become unsinkable all of a sudden.
The company’s core EV business has, and will probably continue to, sputter. In recent quarters, rising competition and falling demand has led to negative growth and shrinking margins.
As we’ve pointed out previously, Tesla’s non-AI catalysts are years away from having any sort of material impact on results. With this, expect further growth and margin declines in the coming quarter. In turn, may lead to renewed doubts, and the beginning of the end for Tesla “meme mania.”
Bottom Line: Stay Out of the Meme Lane
You’re perfectly free to wager that the Tesla meme rally has more runway than skeptics like us assume that it does. Who knows? The speculative frenzy could result in a near-term move back to $300 per share before it’s all said-and-done.
However, if you prefer to invest in, not gamble on, stocks, TSLA is not a strong choice right now. The public’s excitement about Tesla leveling up its past success in EVs into future success with robots and robotaxis is tough to predict.
As soon as the company’s upcoming events, or perhaps not until later this year or in 2025, could this erroneous bullishness for the company finally be put to rest.
There are so many A-rated growth stocks out there, with much less chancy bull cases. There’s no need to be fooling around with highly volatile and unpredictable Tesla stock, which currently earns a D rating in Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.