Tesla stock gains for ten straight sessions: A good sign for EV stocks?

Key points

• Tesla stock has now completed a 10-day gain streak.

• This appears to be a pattern for EV makers, with other brands also surging.

• We examine what this means for investors.

Tesla stock surged by close to 4% on Tuesday against a 0.03% uptick for the S&P 500, completing a 10-day gain streak for the automaker, its longest since June 2023.

Tesla’s rally appears to represent a pattern in the electric vehicle (EV) space. Most notably, Rivian stock is up more than 11% since the end of last week’s trading, buoyed by a fresh partnership with Volkswagen.

Similarly, Lucid Group has added more than 8% to its value since the closing bell on Friday, while Polestar’s share price has risen 7% in the same period.

But while EV stocks are showing signs of revival, investors will be watching closely to see whether the bull run continues beyond the forthcoming Q2 earnings season.

EV stocks gaining traction

After its latest gain on Tuesday, Tesla stock has spiked almost 44% in the past 10 trading sessions, adding about $250 billion in market cap. The stock has outperformed the 16% gain of the Auto-Tires-Trucks sector and the S&P 500’s 4% gain during the same period.

Prior to this 10-day rally, Tesla’s stock was down 27% year-to-date, but it is now up almost 6%. The stock has soared admid stronger-than-expected second-quarter EV deliveries and battery storage deployments.

Other EV stocks have also been winning lately. Rivian, for instance, has gained 31% since the $5 billion Volkswagen investment was announced last month. The deal will provide much-needed cash to the company to ramp up its production.

Rivian’s second-quarter deliveries announcement of nearly 13,800 vehicles, representing a year-over-year increase of 9%, has also pushed its stock up lately.

Lucid Group, the luxury EV sedan maker, has also witnessed some relief lately after suffering badly since it went public in 2021. On Monday, the company reported its second-quarter deliveries of 2,394 vehicles, a jump of 22% from the first quarter and a year-over-year increase of 70%.

Lucid stock is up 18% since the start of July and up almost 40% since hitting a 52-week low in April this year.

China’s EV and battery giant, BYD, has also been seeing success lately, with record second-quarter sales of nearly one million earlier this month. BYD shares are up almost 10% YTD and over 14% in the last three months.

Swedish EV maker Polestar also announced a significant jump in deliveries between Q1 and Q2. Polestar’s ADR is up almost 22% in one month.

EV stocks – Are they risky?

In a recent post on X, Legendary bond manager Bill Gross noted that Tesla is behaving like a meme stock, referring to Tesla’s ongoing rally. The financial expert warned that the gains in the stock aren’t warranted as the EV maker has “sagging fundamentals.”

Gross compared Tesla’s stock to other ‘pump and dump’ stocks like Chewy, EV maker Zapp and GameStop. Chewy stock gained 36% in late June after Keith Gill, who is known for his involvement in the GameStop short squeeze, tweeted a picture of a dog.

Zapp’s shares have gained almost 500% over the past three days, while GameStop shares have gained more than 200% after Gill returned to social media in May.

Gross’s statement about Tesla stock may or may not be true, but we know that the company has been struggling due to rising competition and the growing popularity of hybrid cars. It is not just Tesla; many other EV manufacturers are experiencing similar issues as well.

The auto-tires-trucks sector’s performance highlights this well. The sector has returned -20% over the past three years, similar to what Tesla stock has returned over the same period.

What should investors do?

There is no denying that many EV makers have struggled with the demand over the past few years.

On the other hand, the latest EV delivery numbers suggest that the demand for electric vehicles is stabilizing globally and that the EV market is recovering. Additionally, analysts believe that growing affordable offerings would push EV volumes higher this year and beyond.

However, with most major EV makers expected to report their earnings soon, investors should look for more positive signs for the EV market and make their investment decisions accordingly.