Tesla Inc TSLA has been navigating a rocky road recently, but can it regain its standing among the Magnificent Seven stocks in the second half of 2024?
Ed Egilinsky, managing director at Direxion, shared some exclusive insights on the electric vehicle behemoth’s prospects, with Benzinga.
Tesla’s Valuation Dilemma
“When looking at Tesla, one must determine if it should be valued as a traditional automotive company,” Egilinsky begins. “Based on its current valuation, analysts believe it represents a sizable premium relative to a traditional carmaker. However, the slowdown in their growth raises questions with bears on whether Tesla's current valuation can continue to be justified.”
Despite these valuation concerns, Tesla bulls recently found some solace. The company's second quarter delivery numbers exceeded expectations, providing a much-needed boost.
Read Also: Tesla Stock Soars On Q2 Delivery Beat: Chart Signals Strong Bullish Momentum
However, this positive news comes on the heels of a sales decline over the past two quarters.
Tesla’s Wild Ride
Tesla's stock suffered a 30% decline at the end of Q1, it has rallied strongly over the last month. This recovery highlights the volatile nature of the stock, driven in part by the polarizing figure of Elon Musk.
“Musk is a polarizing figure, making TSLA one of the more actively traded stocks,” says Egilinsky. This intense trading activity is reflected in the popularity of leveraged and inverse trading products, catering to both bullish and bearish short-term traders.
Over the past month, Direxion has seen increased momentum and investor activity in both the Direxion Daily TSLA Bull 2X Shares TSLL and the Direxion Daily TSLA Bear 1X Shares TSLS.
Read Also: Tesla’s Winning Streak: Stock Up 22.74% In 5 days, More Room To Run?
Eyes On Tesla’s Q2 Earnings
With Tesla's second-quarter earnings report slated for release on July 23, all eyes will be on the company's performance. “We should see activity pick up around pre- and post-earnings,” Egilinsky notes, as traders position themselves for potential swings in the stock's price.
What's Next for Tesla?
As Tesla navigates the second half of 2024, the key question remains whether it can sustain its premium valuation amidst slowing growth. The upcoming earnings report will be a critical moment, potentially setting the stage for either a bullish resurgence or further bearish skepticism.
Tesla’s path forward is uncertain, but one thing is clear: the electric vehicle giant will remain a focal point for traders and investors alike, with its stock poised for significant moves as new developments unfold.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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