Will Tesla's Q4 Deliveries Send the Stock to New Highs?

 

As the Santa Claus rally kicks off, all three major U.S. stock indices are showing positive momentum. By Thursday, the Dow Jones ($DJI) was up 2.36%, the Nasdaq gained 3.24%, and the S&P 500 rose by 2.82%.

 

 

Looks like the holiday rally is in full swing. However, despite Tesla’s ($TSLA) impressive 7.36% surge on Tuesday, the stock dipped 1.76% on Thursday. Still, Tesla’s posted an 82.76% increase in stock price so far this year. That’s not something you see every day.

 

 

Tesla’s stock has experienced a dramatic rise since the U.S. election last year, driven by market optimism. Before Election Day, Tesla shares had dropped 2.3% year-to-date. But since then, the stock has surged by a mind-blowing 90.36%. In less than two months, Tesla has added about $705 billion to its market capitalization, now nearing $1.5 trillion. That’s more than the next 29 largest automakers combined, giving Tesla a dominant 50% share of the global auto market’s valuation.

 

 

After last week's pullback, Tesla's stock has rebounded this week. Let’s break down some key factors that could be fueling this surge:

 

Tesla’s performance in China is always under the microscope. While insurance registrations in China dropped slightly by 5% (17,600 units in the week of December 16-22), Q4 registrations have shown a 12% increase compared to Q3 and a 13% increase year-over-year. This indicates strong demand, especially for the Model Y, which has reportedly sold out as speculation grows that a refreshed version will be hitting production in 2025. Analysts like Tom Libby from S&P Global Mobility believe this refresh could have a huge impact on Tesla’s earnings in 2025.

 

In a surprising twist, Hyundai has announced that it will adopt Tesla's North American Charging Standard (NACS) for its EVs starting in 2025. Hyundai will also provide free adapters to its customers, granting access to over 20,000 Superchargers across the U.S. and Canada. Given that Hyundai has already sold 112,000 Ioniq EVs in the U.S. and is growing its EV sales rapidly (77% growth in November alone), this partnership could drive a significant influx of new users to Tesla’s Supercharger network, adding long-term value to Tesla.

 

Next week’s eagerly awaited Q4 delivery report is also fueling investor excitement. Tesla is expected to deliver around 514,925 vehicles in Q4, surpassing last year’s record of 484,507. If Tesla hits this mark, it’ll close out the year strong. Analysts estimate Tesla will deliver around 1.79 million vehicles in 2024, with some higher-end estimates reaching 1.81 million. Q4 deliveries need to exceed last year’s numbers for Tesla to hit its targets, but the real excitement seems to be for 2025. CEO Elon Musk has hinted that Tesla could see delivery growth of 20%-30% year-over-year in 2025.

 

 

Despite the record-breaking Q4 deliveries expected, analysts like Dan Levy from Barclays suggest the stock might not see a major movement based on Q4 results alone. Levy believes that “barring a very sharp beat or miss, we expect the 4Q volume release to have little impact on the stock.” This is because investors are looking past Q4, focused on Tesla’s longer-term growth story, particularly the launch of a lower-cost model and advancements in Full Self-Driving (FSD) technology.

 

While Q4 deliveries may not drastically affect the stock, Tesla’s long-term growth story is intimately tied to developments in autonomous driving and AI. Musk has been vocal about his vision for Tesla in the future of fully autonomous vehicles, with robotaxis and FSD becoming central pillars of Tesla’s growth strategy. If Tesla can deliver on these promises, the stock could surge to new heights, driven by optimism about its AI and autonomy-focused technologies.

 

 

Another piece of news that caught my attention was Elon Musk’s recent post on Christmas. In it, he shared his latest thoughts on weight-loss drugs and gave some advice to those trying to choose between Mounjaro from Eli Lilly & Co ($LLY) and Ozempic from Novo Nordisk ($NVO).

 

 

Musk referred to himself as “Ozempic Santa” in the post, but in the comments, he revealed that he’s actually using Mounjaro for weight loss: “Technically, Mounjaro, but that doesn’t have the same ring to it.” Musk went on to share his personal experience, stating, “High doses of Ozempic made me fart and burp like Barney from The Simpson's. Mounjaro seems to have fewer side effects and be more effective.”

 

 

This caught my attention and made me start following Eli Lilly & Co (LLY) and Novo Nordisk A/S (NVO) more closely. In 2024, Eli Lilly’s stock price has skyrocketed due to the overwhelming success of its weight-loss drugs, and the company is now working on gaining medical approval for its generic versions. As these medications continue to gain popularity, it will be interesting to see how they influence both the healthcare sector and the broader stock market in the long run.

 

 

So, what does all this mean? For Tesla, short-term, Q4 deliveries might not send the stock soaring, especially if the numbers are in line with expectations. But the long-term outlook is a different story. Investors are betting big on Tesla’s future, with upcoming low-cost models, the expansion of its Supercharger network, and, of course, the exciting potential of autonomous vehicles and AI. If Tesla can continue to deliver on its lofty goals for 2025, it might just break through that $1.5 trillion market cap and beyond.

 

As for Musk’s tweet, it could spark a wave of discussion or even hype around the pharmaceutical sector, particularly with Eli Lilly (LLY) and Novo Nordisk (NVO) in the spotlight. Given how much attention these weight-loss drugs have already garnered, it wouldn’t be surprising to see more market movements in the healthcare space as a result.

 

So, what do you think? #elonmusk #tesla