What Is Fueling Tesla's 10-day Bull Run?

After a nearly 4% increase on Tuesday, Tesla has notched 10 consecutive days of gains in its stock. This upward movement not only made up for all the losses since the beginning of the year but also raised the stock price by nearly 6% compared to the start of the year.

Wall Street analysts attribute this to the company's second-quarter vehicle production and delivery figures. Although the delivery volume of the previous quarter experienced the first consecutive two-quarter decline in more than a decade, Tesla's delivery data of 44,300 vehicles did exceed the market's expectation of 43,900 vehicles, bringing new hope to investors.

All of a sudden, the market is valuing the growth potential for Tesla, said Seth Goldstein, an equity strategist at Morningstar, in an interview. Q1 deliveries surprised to the downside so the market was assuming a lower growth rate, and that's why we've seen the large rally.

Goldstein also pointed out that Tesla's second-quarter delivery volume and the news of being included in the official vehicle list in China seem to have rekindled the investment market's expectations for a significant increase in the company's future sales— Wall Street has assumed Tesla will see a second wave of deliveries growth starting in 2026, he said.

As long as that narrative remains intact, I think that the stock will be OK. But if that's pushed out or if management sounds more uncertain that that's going to happen, then I think we could see the stock falter, the analyst continued.

In addition, Tesla's focus on its artificial intelligence business, especially the hype around autonomous driving, seems to be one of the key catalysts driving the recent market trend: as the August 8 Robotaxi launch approaches, the market's expectations for this already highly anticipated unmanned taxi are also increasing, and the revenue expectations for the FSD built on Tesla's AI supercomputing system have also begun to heat up.

For example, Dan Ives, a well-known Tesla bull and analyst at Wedbush, said that Tesla is already the most undervalued artificial intelligence company in the market, and the great success of next month's robotaxi event will further increase Tesla's stock price, and the company's AI business value may reach 1 trillion US dollars in the future.

Garrett Nelson, a senior equity strategist at CFRA Research, also pointed out that due to the broad prospects of Tesla's artificial intelligence business, Wall Street has begun to pay attention to Tesla's autonomous taxi business and believes it may be a huge driving force for the company's growth in the future.

It is worth noting that the participation of short sellers is also an undeniable factor: data shows that before Tesla announced the latest sales data, hedge funds had heavily shorted Tesla—data provider Hazeltree's data shows that about 18% of the more than 500 hedge funds they tracked held a net short position in Tesla at the end of June, the highest proportion in the past year.

Although Tesla's better-than-expected data ultimately caused them to lose about 3.5 billion US dollars, it seems not enough to deter most of them.

Ihor Dusaniwsky of S3 Partners said in an interview on Tuesday: Short sellers have been up and down in this name over the past couple of years. It was the No. 1 short in the market. Now it's No. 4 behind, but this is like the OG short. Everyone is still in it.

Now, it seems that Tesla's upward momentum continues - so far, the electric car company's pre-market increase on Wednesday is close to 1% again. The next test for this round of rising market may be on the 23rd of this month when the company will announce its second-quarter performance after the market closes that day.

$TSLA(TSLA)