Tesla's stock is on a huge run. Here's why one bear isn't buying the 'euphoria.'

By Emily Bary

Guggenheim sees multiple challenges ahead for the second half of this year

Tesla Inc.'s stock is continuing a sharp rally that could translate to about $175 billion of market-capitalization gains over the current winning streak.

But Guggenheim analyst Ronald Jewsikow is sticking with his bearish stance, even in the wake of upbeat delivery numbers from Tesla (TSLA).

The electric-vehicle company delivered 444,000 units in the second quarter, above the 437,000 consensus view and constituting "a materially positive surprise," Jewsikow said. Still, he sees reason for caution, as the last quarter's performance could mean a trickier setup down the road.

See more: Tesla's stock jumps as deliveries beat expectations by a wide margin

"Clearly the financing promos on both the Model Y and Model 3 drove considerable volume growth, but as we have seen with other sizable price cuts and discounts, demand is pulled forward and new demand must be created in [the third quarter] and beyond, which has proven challenging over the last 18 months," Jewsikow said.

Tesla is staring down its share of challenges as the second half kicks off. Jewsikow flagged "production cuts, share losses in China and tariffs in Europe."

Read: Cathie Wood's ETFs sell Tesla's stock for the first time in 9 months

Shares of Tesla are on track to rise for the seventh session in a row, and they've seen strength this week in particular. The stock gained 6.1% on Monday, just prior to the delivery report, before staging a 10.2% climb Tuesday once the numbers came out. It's up another 3.1% in Wednesday morning action.

Jewsikow said his recent conversations have revealed that many investors don't want to be short Tesla's stock before the company holds a robotaxi-focused event in August. Still, his fundamental concerns remain.

"Despite the euphoria, we do not see a path to volume+margin growth over the next several quarters and would expect incremental negative pricing actions and promos to return before the end of July," he wrote, while keeping his sell rating on the stock but boosting his price target to $134 from $126.

Other analysts were more optimistic after the delivery report, including Wedbush analyst Dan Ives, who took the opposite view on the path forward.

"With the majority of price cuts in the rear-view mirror and demand stabilization globally for EVs especially in China, we believe Tesla's march towards 2 million units annual trajectory should be reached over the coming quarters with clear momentum and easier comps for 2025," he wrote.

Ives lifted his Tesla price target to $300 from $275. His new bull-case view for 2025 is $400.

And Citi Research analyst Itay Michaeli said that he and his team "continue to see scope for improving sentiment in Tesla shares ... as well as broader EV sentiment as compared with the negative sentiment we have seen over the past 6 months."

He rates the stock at neutral with a $182 target price.

Also read: Tesla's stock should hit $2,600 in five years, says Cathie Wood's Ark Invest.

-Emily Bary

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07-06-24 0628ET

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