‘The worst is in the rear-view mirror’: Why Wall Street thinks Tesla’s comeback story is finally here

• Tesla stock has had a rough first half of 2024, but Wall Street is eyeing a turnaround.

• Second-quarter deliveries declined, but not as badly as analysts expected.

• All eyes are now on its Robotaxi and AI initiatives as the next phase of growth begins.

After a tough period for Tesla stock and a lot of drama In the wake of Elon Musk’s legal battles, the electric vehicle maker may finally be ready to make a comeback, according to a chorus of Wall Street analysts.

Investors have been watching for a potential rebound in the stock for more than a year, with Tesla sales down 15% over the past 12 months. Tesla deliveries fell for the second straight quarter, but they were stronger than analysts had expected. with a record of 443,956 against estimates of 436,000.

These numbers could be a sign that better days are ahead for the automaker, especially as Musk highlights the “serial” surrounding his salary in bed and investors are watching developments in artificial intelligence on the horizon.

“Is Tesla regaining momentum?” Morgan Stanley strategists said in a note Tuesday. “A little over two weeks ago, our clients were bracing for shareholders to reject Elon Musk’s 2018 compensation plan, which could lead to a change in leadership and strategy, compounding months of negative news flow. Now, clients are starting to ask us about the positive catalysts for Q2 results and beyond.”

Tesla also reduced its inventory during the second quarter and increased its energy storage to a record level. Strategists said the increase in energy storage was a “dramatic” update because it suggests Tesla could benefit from increased energy demand stemming from the rise of AI.

“As the acceleration of Gen G AI drives a multi-generational increase in energy demand, power generation and data center investment, we believe investors will begin to pay more attention to Tesla Energy, which we value at $36 per Tesla share ($130 billion), as the company is uniquely positioned to benefit from investments in the U.S. power grid accelerated by the AI ​​boom,” they said.

Morgan Stanley reiterated its “overweight” rating on Tesla stock with a $310 price target, implying a further 30% upside.

“The stock continues to ride a wave of positive momentum following its annual meeting in mid-June,” said Garrett Nelson, senior equity strategist at CFRA Research, adding, “We believe Musk has successfully shifted investor focus to long-term opportunities in AI, robotics, energy storage and other sectors, away from near-term challenges.”

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Nelson added that Wall Street was focused on Tesla’s Robotaxi, the fully autonomous driving service Musk has been hinting for months that this could be a “massive driver” of future growth.

CFRA maintained its “buy” rating on the stock and raised its price target to $250 per share, implying an upside of just 1%.

Other strategists had even more optimistic forecasts following the better-than-expected delivery figures.

“I think the stock price will double or triple, maybe more, in the next few years. And again, we’re just at the beginning,” said Keith Fitz-Gerald, director of Keith Fitz-Gerald Research. CNBC “It’s about power. It’s about robotics. I think it’s probably the most undervalued AI play on the planet right now. And love him or hate him, Musk knows what he’s doing,” he added Tuesday.

Wedbush Securities analyst Dan Ives previously said: Tesla could see a strong recovery during the second half of the year, as the debut of the Robotaxi represents a turning point for the company.

Wedbush reiterated its “outperform” rating on Tesla and raised its price target to $300 per share. Ives said that in the most optimistic scenario, Tesla shares could climb to $400 by the end of the year, implying a 63% upside from current levels.

“The key for Tesla stock is for the stock market to recognize that Tesla is, in our view, the most undervalued AI company on the market,” Ives said in a note, later adding: “In a nutshell, the worst is in the rearview mirror for Tesla as we believe EV demand is starting to return to the disruptive technology pillar ahead of a historic Robotaxi Day on August 8.”

Tesla shares jumped 10% Tuesday after the deliveries were announced, and climbed 6% Wednesday to trade around $246. The stock has reversed nearly all of the losses it suffered in 2024, with shares down less than 2% year to date.

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