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Analyzing Tesla, Inc. (TSLA): Future Growth Catalysts, Hedge Fund Sentiment and Analyst Ratings

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·9 min read
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In this article, we discuss the future growth catalysts, hedge fund sentiment and analyst ratings for Tesla, Inc. (NASDAQ: TSLA). If you want to skip our detailed analysis of the stock, go directly to Analyzing Tesla, Inc. (NASDAQ: TSLA): More Future Growth Catalysts, Hedge Fund Sentiment and Analyst Ratings.

There is little doubt that Tesla, Inc. (NASDAQ: TSLA), the electric vehicle (EV) maker headquartered in California, has made giant strides in establishing itself as the biggest name in not only the EV space but also the automotive industry as a whole over the last decade. The company, led by billionaire Elon Musk, has a market capitalization of $720 billion. Since the IPO in 2010, the stock has surged more than 20,000%. However, it is also one of the most high volume names on the market, a stock characteristic that often leads to price volatility.

After registering a record rally that lasted through most of last year - Tesla, Inc. (NASDAQ: TSLA) stock price jumped more than 700% between February 2020 and February 2021 - the stock has been taking a breather since April on the back of concerns around slowing EV demand, a global chip shortage that has affected EV production, and a dramatic fall in the price of cryptocurrencies. The company is heavily invested in the new technology and reportedly bought more than $1.5 billion worth of Bitcoin earlier this year.

Despite these concerns, some of which have been around for years, Tesla, Inc. (NASDAQ: TSLA) has continued to consistently beat the market on growth, smash earnings expectations on Wall Street, and provide investors with record returns. For example, in earnings results for the second quarter, posted on July 26, the company reported earnings per share of $1.45, beating market predictions by $0.47. The revenue over the period was close to $12 billion, up 98% year-on-year and beating analyst estimates by $560 million.

Tesla, Inc. (NASDAQ: TSLA) Deliveries Remain Strong

The delivery numbers of Tesla, Inc. (NASDAQ: TSLA), which are often the subject of intense debate, have also been more than impressive. In the second quarter, the company reported 201,250 deliveries, up from around 185,000 deliveries in the previous quarter. Last year, the company had delivered a record 499,950 vehicles, falling short of a goal of 500,000 deliveries set by Musk earlier. Recently, the company has ramped up production at mega factories in Shanghai and California. New factories, in Berlin and Texas, are under construction as well.

On September 8, the China Passenger Car Association posted vehicle sales numbers for Tesla, Inc. (NASDAQ: TSLA) during the month of August, reporting that the firm had sold 44,264 China-made cars over the period, up 34% compared to July and 275% compared to the units sold in August 2020. According to the Chinese body, the local sales of the China-made vehicles had increased as well, up to 12,885 cars in August from 8,621 cars in July. For comparisons, competitor BYD Company Limited (OTC: BYDDF) sold over 60,000 EVs in August.

Tesla, Inc. (NASDAQ: TSLA)'s Competitors

The status of Tesla, Inc. (NASDAQ: TSLA) as the largest EV firm in the world is challenged by competition from the likes of BYD Company Limited (OTC: BYDDF), General Motors Company (NYSE: GM), Ford Motor Company (NYSE: F), NIO Inc. (NYSE: NIO), and XPeng Inc. (NYSE: XPEV), among others. All these firms have been investing heavily in their EV departments and some even have new models lined up to be released over the next few months. It remains to be seen how the Musk-led firm deals with these market forces.

Tesla, Inc. (NASDAQ: TSLA) has acted as a disruptive force in the auto world over the last few years, fundamentally altering the dynamics of the industry. This has provided impetus to other disruptive forces in the market as well, including fintech and crypto that are closely linked to the finance universe. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Analyzing Tesla, Inc. (NASDAQ: TSLA): Future Growth Catalysts, Hedge Fund Sentiment and Analyst Ratings
Analyzing Tesla, Inc. (NASDAQ: TSLA): Future Growth Catalysts, Hedge Fund Sentiment and Analyst Ratings

Copyright: wolandmaster / 123RF Stock Photo

With this context in mind, here are the future growth catalysts, hedge fund sentiment and analyst ratings for Tesla, Inc. (NASDAQ: TSLA).

Analyzing Tesla, Inc. (NASDAQ: TSLA): Future Growth Catalysts, Hedge Fund Sentiment and Analyst Ratings

Since Tesla, Inc. (NASDAQ: TSLA) is widely recognized as a high growth offering, the stock has been a darling of hedge funds that are betting big on innovation. For example, the EV maker is the largest holding of New York-based ARK Investment Management led by Cathie Wood. According to the latest 13F filings, the fund owned over 5.4 million shares of the firm at the end of June 2021 worth $3.6 billion, representing 6.87% of the portfolio. Wood has publicly outlined her bullish stance on the company several times over the past few months.

Cathie Wood ARK Investment Management
Cathie Wood ARK Investment Management

Cathie Wood of ARK Investment Management

Similarly, another New York-based fund, Coatue Management, led by tech-focused Philippe Laffont, also holds a large stake in Tesla, Inc. (NASDAQ: TSLA). Securities filings reveal that the fund owned more than 1.7 million shares in the EV maker at the end of the second quarter of 2021 worth over $1.1 billion. The fund increased their stake in the EV firm by 6% between March and June compared to the first quarter of 2021. The holding represents close to 5% of the investment portfolio of the hedge fund.

Just like BYD Company Limited (OTC: BYDDF), General Motors Company (NYSE: GM), Ford Motor Company (NYSE: F), NIO Inc. (NYSE: NIO), and XPeng Inc. (NYSE: XPEV), Tesla, Inc. (NASDAQ: TSLA) is one of the top EV stocks to buy now.

Hedge Fund Sentiment

Overall, there are many Tesla, Inc. (NASDAQ: TSLA) bulls on Wall Street. According to the data of 873 hedge funds tracked by Insider Monkey, at the end of the second quarter of 2021, 60 hedge funds held stakes worth close to $9.3 billion in the California-based EV maker. This does not compare too favorably to the numbers for the previous three months. In the first quarter of this year, 62 hedge funds held stakes in the firm worth more than $10 billion. The company ranks 117th on the list of most popular stocks among hedge funds maintained by Insider Monkey.

The high valuation of Tesla, Inc. (NASDAQ: TSLA) and recent negative news cycles around safety concerns and slowing EV demand have also resulted in multi-million dollar bearish bets against the firm. For example, Scion Asset Management, headed by Michael Burry, owns PUT options on more than 1 million shares in the company worth more than $731 million, representing 35% of the investment portfolio of the fund. Burry has clashed on the topic with Wood, who is bullish on the company, recently.

most successful short sellers of all time
most successful short sellers of all time

Michael Burry of Scion Asset Management

In addition to Burry, Ken Griffin, the chief of Chicago-based Citadel Investment Group, also has a bearish outlook on Tesla, Inc. (NASDAQ: TSLA) stock. According to the latest data, at the end of the second quarter of 2021, the fund owned PUT options on more than 21 million shares of the EV maker worth close to $15 billion, representing 3.34% of the portfolio. It also has CALL options on around 23 million shares of the EV firm worth $16 billion, representing close to 3.58% of the portfolio.

Billionaire Ken Griffin's Top 10 Stocks Holdings
Billionaire Ken Griffin's Top 10 Stocks Holdings

Ken Griffin of Citadel Investment Group

In addition to BYD Company Limited (OTC: BYDDF), General Motors Company (NYSE: GM), Ford Motor Company (NYSE: F), NIO Inc. (NYSE: NIO), and XPeng Inc. (NYSE: XPEV), Tesla, Inc. (NASDAQ: TSLA) is one of the EV stocks attracting the attention of top hedge funds.

Growth Catalysts: What Makes Tesla, Inc. (NASDAQ: TSLA) Special?

The fierce battles between Tesla, Inc. (NASDAQ: TSLA) bulls and bears on Wall Street have intensified in recent weeks. Wood told finance news website Yahoo Finance earlier this month that she believed that the stock could climb to around $3,000. She underlined the rising market share of the EV maker as one of the main reasons behind the price target, noting that amid increasing competition, the company had captured dramatically more market share since 2017 instead of losing it to other manufacturers.

One of the reasons why Tesla, Inc. (NASDAQ: TSLA) has jumped ahead of the competition in the EV space is the quality of the batteries outfitted in the cars it manufactures. The vehicles produced by the firm offer more range compared to other carmakers. For example, the Tesla Model 3 Long Range Dual Motor has a range of around 360 miles per charge, dwarfing the 248 miles per charge and 180 miles per charge from competitors like Jaguar and Audi respectively.

On September 13, Tesla, Inc. (NASDAQ: TSLA) obtained more preliminary approvals related to the construction of the Gigafactory in Germany, according to a report by business news publication Bloomberg. In August, Musk had said during a visit to the site that he expected to produce the first cars at the factory as early as October. The EV maker, which already controls large portions of the EV market in the US and China, is hoping to make a splash in Europe as well. The company is also working on attracting new subsidies in this regard.

Along with BYD Company Limited (OTC: BYDDF), General Motors Company (NYSE: GM), Ford Motor Company (NYSE: F), NIO Inc. (NYSE: NIO), and XPeng Inc. (NYSE: XPEV), Tesla, Inc. (NASDAQ: TSLA) is one of the EV stocks attracting the attention of investors around the world.

Click to continue reading this article and see Tesla: Top Analyst Ratings and Price Targets.

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Disclosure. None. Analyzing Tesla, Inc. (NASDAQ: TSLA): Future Growth Catalysts, Hedge Fund Sentiment and Analyst Ratings is originally published on Insider Monkey.