Tesla stock surged by near 4% on Tuesday against a 0.03% uptick for the S&P 500, completing a 10-day gain streak for the automaker, its longest since June 2023.
Tesla’s rally appears to represent a pattern in the electrical vehicle (EV) space. Most notably, Rivian stock is up greater than 11% for the reason that end of last week’s trading, buoyed by a fresh partnership with Volkswagen.
Similarly, Lucid Group has added greater than 8% to its value for the reason that closing bell on Friday, while Polestar’s share price has risen 7% in the identical period.
But while EV stocks are showing signs of revival, investors can be watching closely to see whether the bull run continues beyond the forthcoming Q2 earnings season.
EV stocks gaining traction
After its latest gain on Tuesday, Tesla stock has spiked almost 44% up to now 10 trading sessions, adding about $250 billion in market cap. The stock has outperformed the 16% gain of the Auto-Tires-Trucks sector and the S&P 500’s 4% gain through the same period.
Prior to this 10-day rally, Tesla’s stock was down 27% year-to-date, however it is now up almost 6%. The stock has soared admid stronger-than-expected second-quarter EV deliveries and battery storage deployments.
Other EV stocks have also been winning recently. Rivian, for example, has gained 31% for the reason that $5 billion Volkswagen investment was announced last month. The deal will provide much-needed money to the corporate to ramp up its production.
Rivian’s second-quarter deliveries announcement of nearly 13,800 vehicles, representing a year-over-year increase of 9%, has also pushed its replenish recently.
Lucid Group, the luxurious EV sedan maker, has also witnessed some relief recently after suffering badly because it went public in 2021. On Monday, the corporate reported its second-quarter deliveries of two,394 vehicles, a jump of twenty-two% from the primary quarter and a year-over-year increase of 70%.
Lucid stock is up 18% for the reason that start of July and up almost 40% since hitting a 52-week low in April this yr.
China’s EV and battery giant, BYD, has also been seeing success recently, with record second-quarter sales of nearly a million earlier this month. BYD shares are up almost 10% YTD and over 14% within the last three months.
Swedish EV maker Polestar also announced a big jump in deliveries between Q1 and Q2. Polestar’s ADR is up almost 22% in a single month.
EV stocks – are they dangerous?
In a recent post on X, Legendary bond manager Bill Gross noted that Tesla is behaving like a meme stock, referring to Tesla’s ongoing rally. The financial expert warned that the gains within the stock aren’t warranted because the EV maker has “sagging fundamentals.”
Tesla acting like a meme stock — sagging fundamentals, straight up price motion.
But then there appears to be a latest meme stock every other day now.
Most are pump and dump.
Chewy. Zapp. And old favorite GME.
— Bill Gross (@real_bill_gross) July 9, 2024
Gross compared Tesla’s stock to other ‘pump and dump’ stocks like Chewy, EV maker Zapp and GameStop. Chewy stock gained 36% in late June after Keith Gill, who is thought for his involvement within the GameStop short squeeze, tweeted an image of a dog.
Zapp’s shares have gained almost 500% over the past three days, while GameStop shares have gained greater than 200% after Gill returned to social media in May.
Gross’s statement about Tesla stock may or is probably not true, but we all know that the corporate has been struggling because of rising competition and the growing popularity of hybrid cars. It isn’t just Tesla; many other EV manufacturers are experiencing similar issues as well.
The auto-tires-trucks sector’s performance highlights this well. The sector has returned -20% over the past three years, just like what Tesla stock has returned over the identical period.
What should investors do?
There isn’t a denying that many EV makers have struggled with the demand over the past few years.
Then again, the most recent EV delivery numbers suggest that the demand for electric vehicles is stabilizing globally and that the EV market is recovering. Moreover, analysts consider that growing reasonably priced offerings would push EV volumes higher this yr and beyond.
Nonetheless, with most major EV makers expected to report their earnings soon, investors should search for more positive signs for the EV market and make their investment decisions accordingly.