After a difficult year, Tesla (NASDAQ:TSLA) has reported better-than-expected deliveries for the second quarter. The prominent electric vehicle (EV) producer confirmed the production of 410,831 vehicles and the delivery of 443,956, putting it ahead of the 439,000 deliveries that Wall Street predicted. Having successfully exceeded analyst estimates, TSLA stock is rising today, and sentiment toward the stock may be shifting.
One specific analyst has increased his price target and predicts significant upside potential for the EV producer, even as it faces challenges in the broader market.
What’s Happening With TSLA Stock
Following the recent delivery beat, TSLA stock is in the green today. As of this writing, it is up 4%, and its current trajectory suggests that it will keep rising. Shares have climbed steadily over the past month despite battling constant volatility throughout the past year, due to both market forces and CEO Elon Musk’s erratic behavior.
One expert believes this growth will continue for TSLA stock. Dan Ives of Wedbush Securities has long been one of Tesla’s biggest bulls. He recently raised his price target from $275 to $300, implying an upside potential of almost 25%. Ives maintained a “buy” rating for TSLA and noted that he sees the Q2 delivery report as a “major turning point” while also highlighting Tesla’s use of artificial intelligence (AI). As Ives highlighted, his team considers it to be a severely undervalued AI play with extremely high potential.
Not everyone is so optimistic about Tesla’s growth prospects, though. InvestorPlace contributor Marc Guberti recently flagged the company’s declining sales as a major point of concern. He also highlighted that Tesla is facing the prospect of a diminishing market share on the global scale:
“GAAP net income dipped by 55% year-over-year as Tesla had to lower its prices to keep up with competitors, especially in China,” he notes. “Tesla is losing market share in this critical market as Chinese EV makers rise to the occasion. Tesla stock has gained over 1,000% over the past five years and enjoyed a parabolic rise during the pandemic. However, a 51 P/E ratio is excessive for an automobile company with profit margins that resemble other car companies.”
The factor of rising competition from other EV producers is important for investors to consider. Even with the recent delivery success, Tesla is still facing an economic landscape in which its competitors are growing quickly and gunning for its market share. The losses it is taking in China are worrisome, and they aren’t likely to subside soon.
The Road Ahead
Even as TSLA stock rises on the delivery beat, it is important to note that this report isn’t all positive. As InvestorPlace‘s Eddie Pan reports, production is down more than 14% from where it came in one year ago, and deliveries are down almost 5% for the same period. The company benefited from low Wall Street expectations this time around, but that stemmed from a previously poor performance.
Overall, Wall Street still isn’t too bullish on TSLA stock, despite Ives’ recent price target hike. Out of 34 analysts, only 12 maintain buy ratings, while 14 call it a hold, which is the overall consensus it holds on TipRanks. Tesla still has significant ground to make up after a difficult start to the year, and it is still being outshined by other AI and EV stocks.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
