Tesla Stock Has Wiped Out Its Post-Hertz Gains. But Here Are 4 Catalysts to Drive Shares Higher.

Tesla (ticker: TSLA) stock was up about 1.5% in early trading at $913.80 a share. The S&P 500 and Dow Jones Industrial Average were up about 0.9% and 1.1%, respectively.

At $914, Tesla stock would be up about 30% year to date. Bulls, however, probably aren’t feeling elated. The path to get to a price can sometimes matter more than the actual level.

Bulls did get a jolt after Tesla stock crossed a market capitalization of $1 trillion in late October, the day Hertz (HTZ) ordered 100,000 vehicles for its rental car fleet. It was another sign that electric vehicles were going mainstream.

Tesla marched all the way to $1,243.49 on Nov 4. Then stock sales from CEO Elon Musk, the demise of President Biden’s Build Back Better bill, which included EV purchase tax credits, and fears of inflation and higher interest rates sent shares back below $900 on Monday. That is about $10 below where they before the Hertz news came to light.

The good news looking ahead starts out with all the bad news. It looks like Musk is done—or nearly done—selling stock. That removes an overhang. And the Build Back Better bill is no longer reflected fully in Tesla and other EV stocks.

With the new starting point, bulls will be looking at four big catalysts to drive shares higher in coming months.

For starters, deliveries and earnings always matter. Tesla will report fourth-quarter deliveries in the first couple of days in January. A number around 270,000 will give Tesla about 900,000 deliveries for all of 2021. That should be seen as a good result. If deliveries are strong, the stock should rally into the fourth-quarter earnings report, due about three weeks after delivery results are issued.

Barron’s found Tesla stock has outperformed the S&P 500 seven out of the past nine times in the span between reporting deliveries and reporting quarterly earnings. Tesla stock gained about 12% from Oct. 1, the day before third-quarter deliveries were announced, and Oct. 20, the day before third-quarter earnings were released. The S&P 500 rose about 4% over the same span.

When fourth-quarter results are posted, investors expect Musk to be back on the quarterly conference call; he skipped the third-quarter call. That could mean a product announcement is coming. The announcement might deal with Cybertruck or Semi truck delivery dates. Musk could talk about the next big model—a lower-cost EV for the compact segment of the car market.

After all that, investors will be following the production ramp-up at the company’s new assembly plants in Germany and Texas. The German facility will give Tesla the ability to produce more Model Y crossover vehicles, locally, for the European market. The Texas plant will make Model Y crossover vehicles as well as the Cybertruck.

The fourth big deal bulls will be watching for is an update about 4680 battery cells. These are larger batteries that Tesla believes will lower costs. Those batteries should start making it into Tesla vehicles some time in 2022.

Bears, of course, are looking for things too. And they tend to feel that stock-market elation in the other direction. They likely aren’t upset that Tesla shares are falling. The bear case for Tesla these days is over-valuation in the face of new competition. More EV models are coming to the U.S. market in 2022, which should challenge Tesla in terms of share.

Tesla has roughly 70% of the U.S. market for EVs, but it can’t maintain that forever. The important thing for bulls in 2022 will be to see every car that Tesla makes is sold, regardless of how other models do.

Tesla stock rose more than 740% in 2019. The company’s market cap in 2021 crossed $1 trillion. It’s looking like 2022 will be just as interesting as the prior two years.

Write to Al Root at [email protected]