In comparison to the broader market this year, Tesla Inc (NASDAQ:TSLA) underperformed. Due to growing competition from traditional automakers, signs of a possible sales slowdown in China, and a persistent semiconductor shortage, investors are reluctant to invest in the world’s leading electric vehicle maker.
Over the past month, there has been some indication that Tesla’s stock is following its downward trend and that investors are taking advantage of its current weakness. Palo Alto, California-based electric vehicle maker’s stock has gained nearly 13 percent over the month, nearly erasing all year-to-date losses. TSLA closed Friday at $678.90, down about 4 percent on the year.
For Tesla supporters, perhaps the best thing about the current rebound is that the stock’s momentum is supported by a number of positive catalysts. On Friday, the company told investors that it delivered 201,250 cars worldwide in the second quarter, a record number despite a chip shortage and concerns about its falling Chinese market.
The bulk of sales during that period were of the Model 3 sedan and Model Y crossover, which are produced in Shanghai and Fremont, Calif. These countries are Tesla’s largest markets. The strong delivery performance is an indication that CEO Elon Musk is likely to report another strong quarter when the company reports its second-quarter financial results later this month.
In a note to clients, Wedbush Securities analyst Daniel Ives said:
“This quarter was an impressive performance by Musk & Co. and now, with a strong performance in the second half of the year, they should be on track to reach ~900k vehicles for the year, which was a significant target.”
In addition to Tesla continuing to produce additional vehicles each quarter, the improvement in overall sentiment for growth stocks is also helpful.
Tech mega-caps like Facebook Inc (NASDAQ:FB), Alphabet (NASDAQ:GOOGL) and Microsoft Corporation (NASDAQ:MSFT) are back near their all-time highs as inflation fears ease and the outlook for tech stocks improves as the reopening of the U.S. economy gains traction.