TSLA is surging despite lower delivery expectations, here’s why

Tesla (TSLA) stock is showing immense strength just a day before its quarterly deliveries are announced. It is up over 16% in the last 5 trading days and 20% in the last month. It does not show any signs of stopping. As of writing this article, the stock was trading at $212, up 7.15% for the day.

How is this optimism and momentum justified? After all, we are expected to receive decreasing Tesla deliveries Year on Year for the second quarter in a row.

What are the analysts saying?

It’s hard to look at analysts to find the answer. As always, there are some that are optimistic while there are others that paint a gloomy picture for the company.

Take Wells Fargo analyst Colin Langan for instance. He has voiced concerns about Tesla deliveries expectations being too high. Not only that, he also sees further price cuts as the demand is expected to stay low. He even has a price target of $120 on the stock. That’s as pessimistic as one can get.

On the other hand, there is Dan Ives, the Wedbush analyst who has a price target of $275. Notably, his reason for optimism isn’t the tesla deliveries. He thinks it’s the Robo-Taxi event next month that is the game changer for the stock. And it’s hard to doubt him.

Tesla is the industry leader when it comes to vehicles on the road. Its fleet is gathering data every passing day and it’s unlikely any other EV maker will come close to the vast amounts of data that Tesla possesses.

Once it starts leveraging that data for its FSD(Full Self Driving) technology, Robo-Taxis will become a reality. It’s a dream that has been sold many a time. But don’t blame the investors for thinking this time it’s different. People who have doubted Elon Musk haven’t fared well in the past.

And then there is Adam Jones, the Morgan Stanley analyst who has a $310 price target. He not only thinks the Robo-Taxis will bring value but also incorporates the same technology being used in AI and Robotics into his valuation.

Therefore, it may not be wrong to say that investors aren’t even bothered about the Tesla deliveries. That will also explain the surge in price as the stock tries to settle at a new price in anticipation of next month’s event.

Does all this mean you should buy the stock?

It won’t be a bad idea. Tesla tends to give great returns just before its events. And Robo-Taxi event isn’t just a small event. If successful, it could catapult the stock into a bull rally that might see it cross the $1 trillion valuation milestone in a matter of weeks.

Watch out for tomorrow’s volatility though. The tesla deliveries numbers are likely to come in before the market opens and if bad, might spread some negativity in the market.

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