Tesla stock had its best day in more than two months today, finishing up 5.3%, outpacing all other stocks in the S&P 500 and the Nasdaq 100 indices on the day.
The move follows recent forecasts of electric vehicle adoption suggesting a tipping point — when electric vehicle sales outpace internal combustion engine sales — may occur in the early 2030s. Consulting firm Ernst & Young published a new study this week forecasting such an event by 2033, and as early as 2028 in Europe. Previously, E&Y had forecast 2038 as the inflection point.
Piper Sandler analyst Alex Potter is in the same ballpark. In a newly published forecast, the firm expects global EV adoption to surpass 50% marketshare between 2030 and 2035.
In roughly one week, Tesla will announce their worldwide delivery and production numbers for the second quarter. Last quarter, Tesla delivered a record 184,800 vehicles, and Wall St. expects Tesla to deliver another record quarter in Q2. TSLA stock may see higher trading volume as investors position for the report.
Tesla was one of the fastest growing companies of 2020 and early 2021. As markets seesaw between value and growth plays, Tesla maintains its status as a high-beta stock offering high volatility and potentially higher returns. The 1-year average beta for Tesla is 2.27 compared to 1.25 for QQQ (non-financial Nasdaq 100).
Early on Wednesday, Joe Terranova, CNBC contributor and Chief Market Strategist for Virtus Investment Partners, mentioned he recently bought Tesla shares because, like Netflix, he expects it will rebound following a period of underperformance.
"I'm trying to capture an opportunity in mega-cap technology where there has been an underperformance," Terranova explained. His comments may offer insight into Wall St.'s current narrative around TSLA stock.
Terranova's comment was followed with affirmation from Jon Najarian who recently purchased Tesla call options, a bullish trade.
The “Buy American” Trade
The Biden administration has continued to reiterate their stance on supporting American companies. Tesla's Model 3 on Wednesday was named the most American-made vehicle in an annual Cars.com ranking.
Tesla may also benefit from the administration’s push for EV adoption. Contingent upon legislation, consumers could see credits for EV’s between $7,500 and $12,500.
Disclosure: Rob Maurer is long TSLA stock and derivatives. Assistance from Brennan Ertl.