This is The Takeaway from today’s Morning Brief. Sign up to receive it in your inbox every morning, along with:
If Tesla (TSLA) can be a tech company when auto sales are sluggish, it can surely be a car company when sales beat expectations. Wall Street sees Tesla bulls gaining the upper hand again.
Tesla shares soared more than 25% last week, boosted by better-than-expected vehicle deliveries, far outpacing the more modest gains of the rest of the Magnificent Seven.
When CEO Elon Musk declared earlier this year that Tesla wasn’t a car company, a message that sent shares plummeting amid sagging sales. It was a conveniently phrased claim, but it was true enough. And it seems the mandate works both ways.
The stock surge speaks to the power of promoting an industry-leading product (a lesson for AI startups) and the benefits of making your AI ambitions part of a broader business plan rather than the only aspect of it, but it also highlights how Tesla’s lofty AI goals are still inextricably tied to car sales.
Combining grand tech ambitions with getting cars off the shelves has been key to Musk’s prowess as a salesman.
“In short, we believe the worst is over for Tesla and the EV demand story is beginning to shift back to the disruptive tech giant,” Dan Ives, an outspoken Tesla advocate at Wedbush Securities, wrote in a note earlier this week.
Positive delivery data counters the wave of negative sentiment.
Backed by growing competition from China, weak domestic demand, price cuts, layoffs and Musk’s legal and corporate troubles, Tesla has struggled as a laggard among the Magnificent Seven. But recent wins can erase earlier losses, and Tesla is riding a string of wins with earnings reports and the highly anticipated unveiling of its robotaxis on the horizon.
Investors are cashing in on this changing mood: Tesla shares are up more than 60% since their lows in late April.
But even some Tesla supporters are questioning the stock’s recent rally: While it’s true that Tesla beat expectations, sales are down from this period last year, and how have more aggressive rivals and lower prices eroded profitability?
“Tesla’s EV sales are actually down 5% and the company seems to be succumbing to the idea of EV sales. It’s all about FSDs and taxis now,” Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management, said of fully autonomous driving.
In some ways, Tesla’s flexible identity — a car company in good times and a tech company in bad times — could get in the way of a clear corporate strategy: Is Tesla still aiming to be a mass-market EV to line driveways, or is it a platform for building a fleet of self-driving taxis that push the frontiers of AI technology?
The story continues
Of course, it can be both. And Musk tends to want it to be both. Investors don’t seem to care what metaphorical hat a company is wearing on any given day. Just make sure the numbers go up. AI can do that. And so far, so can cars.
Hamza Shaaban is a reporter covering markets and economics for Yahoo Finance. Follow Hamza on Twitter. translation:.
Morning simple image
For the latest stock market news and in-depth analysis, including stock-moving events, click here.
Read the latest financial and business news from Yahoo Finance