Text size
A Tesla electric car charges at a Tesla charging station
Sean Gallup/Getty Images
Tesla
stock has been great until now. The bulls are hoping for new highs, but shares can’t seem to crack the $800 barrier. What gives?
Recent catalysts that have driven the stock are running out of gas. Investors likely will need a big quarterly earnings report from the company, due at the end of this month to send shares to new highs. More on that later.
Tesla shares are down about 0.9% on Friday, to $786.43. The S&P 500 and Dow Jones Industrial Average are up about 0.2% and 0.1%, respectively. The Nasdaq is down 0.4%.
Shares of the electric vehicle maker had been on roll until recent days. Tesla (ticker: TSLA) stock is up about 5% and and 21% over the past one and three months, respectively. That’s stellar. The
Nasdaq Composite Index
is down about 4% over the past month and is up less than 1% over the past three.
Tesla’s recent strength has been driven by a couple of factors. First, the company is navigating the global semiconductor shortage and delivering more cars than investors expected. Tesla delivered more than 240,000 cars in the third quarter.
Analysts projections were closer to 230,000 vehicles. So far in 2021, Tesla has delivered more than 627,000 vehicles, up almost 100% over the comparable span in 2020.
Next, Tesla has been making progress on its self-driving car technology. About a week ago, the company started using Tesla-calculated safety scores to qualify drivers for the latest version of its autonomous driving software the company calls Full Self Driving.
Investors expected Full Self Driving advances in 2021 and they are getting them, which helps bullish sentiment.
Full Self Driving, of course, doesn’t make a car truly self driving. It’s a driver assistance feature designed to make cars safer. Drivers still need to stay engaged with eyes on the road. Truly self driving cars for consumers are years down the road.
Friday’s share-price drop follows the company’s annual shareholder meeting in Austin, Texas. The biggest revelation coming from that meeting was a headquarter move from northern California to Texas. That turned some heads but shouldn’t have a long term impact on the company’s stock price.
It seems investors are waiting for something else to drive the stock to new highs. Tesla shares hit $900.40 in January. That’s the stock’s 52-week high. Bulls would like to see the $800 and $900 levels eclipsed by year-end.
It will likely take an earnings surprise to get the stock moving higher again. “Earnings will be another positive catalyst as 900,000 vehicles for the year is a realistic goal,” Wedbush analyst Dan Ives tells Barron’s. “Capacity expanding massively with Austin and Berlin going live.”
He is one of the bulls, rating shares Buy. Ives’ price target is $1,000.
Third-quarter earnings are due in late October. Analysts project $1.46 in per share earnings from $13.4 billion in sales.
Tesla will have to do better than that. Recent deliveries were stronger than expected, so there is reason for optimism. Third- quarter earnings estimates are up about 2% over the past week, since Tesla reported delivery figures.
How much will it take to move the stock: Earnings of $2 a share would do it. That’s a little higher than the highest quarterly estimates on the street. Above $2 in per share earnings could be called blow-out results.
Write to Al Root at allen.root@dowjones.com