📈 Tesla Surges 26% After Deliveries Report

Plus Air Canada gets hit hard by short sellers...

Author

Maxwell Nicholson
July 07, 2024

TOP STORY
📈 Tesla Surges 26% After Deliveries Report, Fully Recovering from its 2024 Slump

😍 The ~5,000 Tesla shareholders on Blossom are SMILING after Tesla’s incredible bull run this week, with the stock climbing a whopping 26%!

🚘 The bull run was driven in part by Tesla announcing that it beat delivery expectations by ~1%, delivering 443,956 vehicles in Q2, compared to an estimated 439,302.

🌟 While this may not seem too significant, it’s one of the first positive signals the company has had in awhile and has renewed investor hope.

🔬 So let’s take a look underneath the hood and unpack what’s been going on for the darling EV start-up…

😬 The Birds-Eye View: Tesla and EVs Have Been Struggling

As I wrote about back in March, Tesla has been struggling:

  • 🔋 EV Sales are slowing around the world from a 100% increase in 2021 to only a projected 21% increase this year.

  • 🇨🇳 Tesla faces increased competition in China, with BYD surpassing Tesla as the top seller of EVs

  • 🤑 Telsa was the most expensive of the Magnificent 7, with a higher price-earnings ratio than even Nvidia.

As a result, Tesla stock has gotten pummelled. Before its recent 8-day bull streak, it was down 33% over the past year…

🌟 A Much Needed Turnaround

📈 The delivery news quickly and significantly turned the tide for Tesla and also called attention to a few other areas investors can be excited about:

🎯 As a result, analysts have revised their price targets for Tesla:

  • Bank of America raised from $220 to $260

  • Wedbush raised from $275 to $300

  • Morgan Stanley kept its price target at $310

  • JP Morgan kept its low price target of $115 in contrast to the others

❝

The worst is in the rear-view mirror for Tesla as we believe the EV demand story is starting to return to the disruptive tech stalwart ahead…

Wedbush Analysts

🌊 Rough Waters (or roads) May Still Lie Ahead…

Despite the jump, it’s not all smooth sailing for Tesla as the overall EV market continues to struggle.

👀 Eyes will turn to Tesla’s Q2 earnings report on July 23 to examine the company’s gross margin, upcoming product launches, and other key metrics, with analysts predicting the company’s gross margin will be hurt by an increasingly crowded market.

🌼 On Blossom, Tesla ranked as the #1 most-sold stock this week and the #4 most-bought stock, but as always, make sure to do your own research and build your own investing thesis before taking action!

😭 Short sellers got destoyed by Tesla’s stock jump, losing $3.5B in the two days of trading following the delivery report.

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IN CANADA
😰 Air Canada Down 30% in the Past Year As Short Interest More Than Doubles

🎯 Air Canada, the leading Canadian airline, has found itself in the crosshairs of professional ‘short-sellers’ - aka investors betting against a stock.

Shorts have more than doubled to 19% of total stock available, reaching their highest level since the 2021 pandemic. Here are some of the reasons why:

  • 📉 In Q1 this year, Air Canada reported a $81M loss, 3 times larger than analyst forecasts and a devastating change from its $4M in profit last year

  • 👎 In May Air Canada was ranked last among all North American airlines in customer satisfaction

  • 📊 Air Canada’s market share has declined from 54% to 48% as new entrants like Porter, Flair, and Swoop increase competition

  • 🪧 The Airline faces threats of contentious negotiations with its pilot’s union that could lead to strikes or higher pay

  • 😰 The company faces overall industry headwinds driven by aircraft shortages, geopolitical uncertainty, and high inflation

With the stock now down around 30% over the past year and 58% over the past 5 years, investors are likely wondering if a rebound is on the horizon.

Kevin Chiang from CIBC seems to think so, saying the shares are already pricing in a ‘hard landing’ or a worst-case scenario, calling out that the company’s Enterprise value to EBITDA ratio sits at 2.8, 20% lower than its historical average.

Matthew Lee from Canaccord expects a rebound to $32, an over 85% increase from today’s price.

❝

“Not to sound like a broken record, but we view Air Canada as a deep value name.”

Kevin Chiang, CIBC Capital Markets

Even so, short-sellers are clearly not as bullish, and your own decision should likely depend on to what extent you think the market has already priced in the challenges the airline faces ahead.

💡 Over 2,400 Blossom members hold Air Canada ($AC) making it the 24th most popular stock in the community

FROM THE BLOSSOM COMMUNITY
🎙️ Top Discussions this Week

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