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    Tesla Frenzy May Derail Its Shares Price

    Image Source: FilipArtLab / Shutterstock

    Struggling through much of 2024 and earning the undesirable title of the poorest-performing S&P 500 stock for several months, Elon Musk’s electric vehicle (EV) company, Tesla Motors (NASDAQ: TSLA), staged a remarkable turnaround following its recent delivery update.

    Significantly, the stock not only surged impressively but soared sufficiently to turn positive – by 5.84% – in the year-to-date (YTD) chart and a remarkable 51.34% over the last 30 days of trading. The continuous rally has propelled the present Tesla stock price to $263.19.

    However, despite the enthusiasm and the momentary strength, there could be uncertainties surrounding TSLA’s ongoing stock surge.

    Tesla Motors: A Transition to Tesla Robotics?

    At the forefront, Elon Musk’s notion that Tesla should be perceived not merely as an automaker but as an artificial intelligence (AI) and robotics entity remains largely unverified.

    While the company has showcased its ‘Optimus’ robot and is in the experimental stages of its self-driving technology, the former remains at a notably small scale, and the latter faces setbacks due to prolonged delays and the suggestion that Mercedes (ETR: MBG) is reportedly ahead.

    The true litmus test for Tesla as an AI entity may arrive on August 8 with Elon Musk hinting at the unveiling of an autonomous taxi – commonly dubbed as ‘Cybercab’. The magnitude of the event remains uncertain as details on its scope are scarce, and there are doubts regarding its occurrence, given Musk’s reputation.

    Will Tesla’s Upward Trend Endure?

    Moreover, the delivery report itself – the trigger for the current rally – casts shadows on TSLA’s mid-term outlook.

    It appears robust primarily in contrast to investor apprehensions, indicating not that Tesla has entirely escaped challenges but rather that the situation isn’t as dire as it was in January when Musk’s EV company managed to deliver only one vehicle in South Korea.

    In this context, it parallels Tesla’s recent earnings report, which sparked a brief rally by virtue of not being as dire as initially feared.

    From a stock market perspective, the fact that TSLA shares are currently the most overbought since June 2023, as of July 10, is perturbing.

    This raises concerns about a potential impending correction, especially worrisome given Tesla’s experience of a rally in July and August last year followed by a sustained decline starting in September.

    Is Tesla Now a Meme Stock?

    Recent market actions by TSLA may lead Bill Gross, the co-founder of Pacific Investment Management Company (PIMCO), to perceive Tesla as a meme stock akin to companies like GameStop (NYSE: GME) and Chewy (NYSE: CHWY).

    Nonetheless, this perspective isn’t novel. In certain circles, the EV manufacturer has long been viewed as a meme stock due to its response to Elon Musk’s statements and behaviors, along with its seemingly stratospheric valuation compared to peers in both traditional and electric vehicle sectors.

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