Fourth-quarter deliveries “immaterial to the majority of the current Tesla bull case,” Barclays argues
Tesla is expected to set a new quarterly record for deliveries when those figures drop early in the new year (on January 2, to be exact).
But with the frenzy surrounding the stock in the wake of Donald Trump’s presidential victory in November, does its operational performance even matter?
Barclays contends that if these numbers disappoint then, no, it doesn’t. From IBD:
“However, the firm [editor’s note: Barclays] believes investor focus on Tesla stock’s fundamentals is generally limited and that a light near-term volume miss ‘would likely do little to dampen’ TSLA’s rally, fueled by President-elect Donald Trump, autonomous vehicle and artificial intelligence.
...Barclays also wrote that Tesla’s Q4 result is likely ‘immaterial to the majority of the current Tesla bull case.’”
“Barclays analysts on Dec. 18 wrote the post-election rally in TSLA shares reflects a ‘sharp disconnect’ between the stock and the company’s fundamentals. The firm wrote that technicals and options are playing an outsized role in the rally and that Tesla shares are now best compared to cryptocurrencies.”
It’s clear, though, that the options market is pricing this as an “event,” whether the fundamentals matter or not. Tesla’s implied two-week volatility (which includes the anticipated announcement on deliveries) is higher than its one-week volatility (whose options are based on this hopefully uneventful holiday week) by about 2.5 points. In other words, traders are bracing for a bigger move next week versus this week. For 2024 as a whole, two-week implied vol has tended to be about 1 point lower than its shorter-term counterpart.
How fierce has the postelection rally in Tesla been? Well, 28 analysts rank the stock a buy, according to Bloomberg, compared to 16 who say hold and another 16 that say sell. But the average 12-month target price is just $295 — that is, more than 30% below its current price, with only six having a price target above where it’s trading now.
But with the frenzy surrounding the stock in the wake of Donald Trump’s presidential victory in November, does its operational performance even matter?
Barclays contends that if these numbers disappoint then, no, it doesn’t. From IBD:
“However, the firm [editor’s note: Barclays] believes investor focus on Tesla stock’s fundamentals is generally limited and that a light near-term volume miss ‘would likely do little to dampen’ TSLA’s rally, fueled by President-elect Donald Trump, autonomous vehicle and artificial intelligence.
...Barclays also wrote that Tesla’s Q4 result is likely ‘immaterial to the majority of the current Tesla bull case.’”
“Barclays analysts on Dec. 18 wrote the post-election rally in TSLA shares reflects a ‘sharp disconnect’ between the stock and the company’s fundamentals. The firm wrote that technicals and options are playing an outsized role in the rally and that Tesla shares are now best compared to cryptocurrencies.”
It’s clear, though, that the options market is pricing this as an “event,” whether the fundamentals matter or not. Tesla’s implied two-week volatility (which includes the anticipated announcement on deliveries) is higher than its one-week volatility (whose options are based on this hopefully uneventful holiday week) by about 2.5 points. In other words, traders are bracing for a bigger move next week versus this week. For 2024 as a whole, two-week implied vol has tended to be about 1 point lower than its shorter-term counterpart.
How fierce has the postelection rally in Tesla been? Well, 28 analysts rank the stock a buy, according to Bloomberg, compared to 16 who say hold and another 16 that say sell. But the average 12-month target price is just $295 — that is, more than 30% below its current price, with only six having a price target above where it’s trading now.
