Tesla a Solid Buy After Stock Bottomed

Doubt over Tesla’s (NASDAQ:TSLA) is came to an end in the last few weeks. When the company previously reported falling unit sales due to an end in tax credits, the stock fell below $200. But strong second-quarter delivery numbers changed the narrative. Tesla could continue its rebound for the next few months.

Q2 Delivery Numbers Impress Markets

Tesla reported 95,200 deliveries in the second quarter, led by 77,550 Model 3. The market expected Model 3 deliveries of 74,100. CEO Elon Musk delightedly reported the strong numbers, much against the chagrin of bears. Debt levels and costs form the basis of a bear call but Tesla continues to fight against the current. As long as unit sales grow, Tesla’s revenues will eventually exceed costs.

Liquidity is not an issue at all for Tesla. Whenever it needs to, the company has the debt market and equities market available to raise funds.
Premium automobile companies continue to develop EVs but cannot compete on price and feature. Even when GM released the Volt at prices far-below the average Tesla EV, GM still failed to grow market share fast enough.

Your Takeaway

Bears have a big bet against the company with a 31% short float on shares and may feel some pain next. The bear phase is over for Tesla stock and leaves room for bulls to take the stock back up to the $250 - $300 level