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Shares of Tesla (TSLA - Free Report) have gained remarkably, pushing the market value of the electric vehicles (EV) manufacturer into the trillion-dollar range. Due to this notable rally, several analysts have begun to question the stock's valuation, which has resulted in downgrades.
According to an article on Reuters, Goldman Sachs recently downgraded Tesla to a "hold" rating, aligning with Morgan Stanley and Barclays. Despite the downgrade, the brokerages adjusted their price targets to reflect the remarkable surge in Tesla shares, which have risen 71% since late April and more than doubled this year. While acknowledging the exceptional momentum, they remain optimistic about Tesla's prospects, anticipating robust growth in the coming period.
For investors looking to capitalize on Tesla's performance while mitigating risk, we present a selection of ETFs that offer significant exposure to the EV giant. These ETFs provide an opportunity to bet on Tesla’s success with reduced risk levels. Meet Kevin Pricing Power ETF (PP - Free Report) , ConsumerDiscretionary Select Sector SPDR Fund (XLY - Free Report) , ARK Autonomous Technology & Robotics ETF (ARKQ - Free Report) , Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) and Vanguard Consumer Discretionary ETF (VCR - Free Report) .
Investigating the Downgrade
As per Yahoo Finance, analysts question Tesla's ability to maintain its outstanding performance as the company's stock price soars further. Although it is acknowledged that the EV manufacturer has succeeded in building an "EV castle" with revenue sources like the supercharger network and collaborations with rivals like Ford (F - Free Report) , General Motors (GM - Free Report) and Rivian (RIVN - Free Report) , questions continue to arise about the reliability of some growth drivers.
Particularly, analysts suggest that autonomous driving and generative AI are separate technological fields, raising doubts about the AI-related stock increase. Margin issues and price reductions are two pre-existing factors influencing the stock, according to Adam Jonas of Morgan Stanley.
Powering Past the Negatives
The appointment of a new CEO at Twitter, clever supercharging licensing arrangements, and an unusual spike in artificial intelligence-related equities combined to produce a perfect environment, causing share prices to skyrocket by more than 100% within a year.
Tesla's upward trend can be linked to a series of favorable developments during the last two months. Rival manufacturers Ford and General Motors have entered into agreements to acquire access to Tesla's charging network, which may cement it as the industry standard.
Furthermore, China's recent announcement of a significant $72.3 billion (520 billion yuan) tax cut package for EVs and other environmentally friendly vehicles boosted Tesla's stock even further.
The combination of these elements has catapulted Tesla to new heights, strengthening its status as a disruptive force in the automotive industry and making it the most significant global car firm in terms of market value.
Volvo Joins Ford and General Motors in a Significant Move
As mentioned in an article in Reuters, Volvo Cars (VLVLY - Free Report) collaborated with Tesla to allow its EVs access to the latter’s renowned Supercharger network encompassing the United States, Canada and Mexico. Volvo becomes the first European automaker to adopt Tesla's North American Charging Standard (NACS), joining a growing list of EV manufacturers and charging equipment providers that have adopted this cutting-edge technology. Volvo vehicles in the three countries will be equipped with the NACS port beginning in 2025, allowing access to Tesla's Supercharger network.
Tesla’s EV Charging Superiority
As mentioned in a Reuters’ article, Tesla EV charging technology is quickly gaining popularity as a potential North American standard, offering a big boost to the company's attempts to broaden access to its formerly private charging infrastructure.
Multiple automakers have recently embraced Tesla's charging design, rejecting previous attempts by the Biden administration to establish the Combined Charging System (CCS) as the dominant standard in the United States. Tesla's North American Charging Standard (NACS) is more readily accessible and reliable than the competing CCS charging network (Read: Top EV ETFs for Electrifying Gains as Charging Network Expands).
Revving Up Revenue
According to Investor’s business daily, Wall Street experts forecast Tesla's delivery to grow 74% to 445,000 units in Q2. This considerable year-over-year rise can be attributed to favorable comparisons to Q2 2022 when Tesla's Shanghai plant was temporarily closed due to COVID-19 lockdowns. Analysts predict that Tesla will supply around 1.82 million vehicles in 2023, exceeding the 1.313 million shipped in 2022.
Per Reuters, Tesla is on track to have another record-breaking quarter in China, thanks to robust sales. However, the business is facing increased rivalry from domestic rivals such as BYD, resulting in a modest loss in Tesla's market share in China's battery electric car segment. Analysts predict that Tesla will sell around 155,000 vehicles in China between April and June, a 13% rise over the previous record-breaking quarter.
The fund has an exposure of 24.4% in Tesla, making it the top holding. Meet Kevin Pricing Power ETF has gathered an asset base of $37.13 million and has a basket of 17 securities. PP charges an annual fee of 0.77%.
Meet Kevin Pricing Power ETF has earned 50.55% year to date and 19.37% in the last three months.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund has 19.27% exposure in Tesla along with an asset base of $17.02 billion. XLY has a basket of 53 securities and charges an annual fee of 0.10%.
The fund has a Zacks ETF Rank #1 (Strong Buy) and a Medium risk outlook. Consumer Discretionary Select Sector SPDR Fund has generated 30.34% year to date and 18.44% in the last three months.
Employing an active strategy, ARK Autonomous Technology & Robotics ETF has an exposure of 14.59% in Tesla, making it the top holding in the fund. The fund has amassed an asset base of $1.04 billion and has a basket of 34 securities. ARKQ charges an annual fee of 0.75%.
ARK Autonomous Technology & Robotics ETF has a Medium risk outlook and has added 35.21% year to date and 16.84% in the last three months.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
Fidelity MSCI Consumer Discretionary Index ETF has an exposure of 11.99% in Tesla. FDIS has gathered an asset base of $1.19 billion. The fund charges an annual fee of 0.08%.
The fund has a Zacks ETF Rank #2 (Buy) and a Medium risk outlook. Fidelity MSCI Consumer Discretionary Index ETF has generated 28.14% year to date and 16.46% in the last three months.
Vanguard Consumer Discretionary ETF has an exposure of 13.39% in Tesla. VCR has amassed an asset base of $4.59 billion and has a basket of 309 securities. The fund charges an annual fee of 0.10%.
The fund has a Zacks ETF Rank #1 and a Medium risk outlook. Vanguard Consumer Discretionary ETF has earned 28.01% year to date and 16.44% in the last three months.
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Plug Into Tesla With These ETFs
Shares of Tesla (TSLA - Free Report) have gained remarkably, pushing the market value of the electric vehicles (EV) manufacturer into the trillion-dollar range. Due to this notable rally, several analysts have begun to question the stock's valuation, which has resulted in downgrades.
According to an article on Reuters, Goldman Sachs recently downgraded Tesla to a "hold" rating, aligning with Morgan Stanley and Barclays. Despite the downgrade, the brokerages adjusted their price targets to reflect the remarkable surge in Tesla shares, which have risen 71% since late April and more than doubled this year. While acknowledging the exceptional momentum, they remain optimistic about Tesla's prospects, anticipating robust growth in the coming period.
For investors looking to capitalize on Tesla's performance while mitigating risk, we present a selection of ETFs that offer significant exposure to the EV giant. These ETFs provide an opportunity to bet on Tesla’s success with reduced risk levels. Meet Kevin Pricing Power ETF (PP - Free Report) , Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) , ARK Autonomous Technology & Robotics ETF (ARKQ - Free Report) , Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) and Vanguard Consumer Discretionary ETF (VCR - Free Report) .
Investigating the Downgrade
As per Yahoo Finance, analysts question Tesla's ability to maintain its outstanding performance as the company's stock price soars further. Although it is acknowledged that the EV manufacturer has succeeded in building an "EV castle" with revenue sources like the supercharger network and collaborations with rivals like Ford (F - Free Report) , General Motors (GM - Free Report) and Rivian (RIVN - Free Report) , questions continue to arise about the reliability of some growth drivers.
Particularly, analysts suggest that autonomous driving and generative AI are separate technological fields, raising doubts about the AI-related stock increase. Margin issues and price reductions are two pre-existing factors influencing the stock, according to Adam Jonas of Morgan Stanley.
Powering Past the Negatives
The appointment of a new CEO at Twitter, clever supercharging licensing arrangements, and an unusual spike in artificial intelligence-related equities combined to produce a perfect environment, causing share prices to skyrocket by more than 100% within a year.
Tesla's upward trend can be linked to a series of favorable developments during the last two months. Rival manufacturers Ford and General Motors have entered into agreements to acquire access to Tesla's charging network, which may cement it as the industry standard.
Furthermore, China's recent announcement of a significant $72.3 billion (520 billion yuan) tax cut package for EVs and other environmentally friendly vehicles boosted Tesla's stock even further.
The combination of these elements has catapulted Tesla to new heights, strengthening its status as a disruptive force in the automotive industry and making it the most significant global car firm in terms of market value.
Volvo Joins Ford and General Motors in a Significant Move
As mentioned in an article in Reuters, Volvo Cars (VLVLY - Free Report) collaborated with Tesla to allow its EVs access to the latter’s renowned Supercharger network encompassing the United States, Canada and Mexico. Volvo becomes the first European automaker to adopt Tesla's North American Charging Standard (NACS), joining a growing list of EV manufacturers and charging equipment providers that have adopted this cutting-edge technology. Volvo vehicles in the three countries will be equipped with the NACS port beginning in 2025, allowing access to Tesla's Supercharger network.
Tesla’s EV Charging Superiority
As mentioned in a Reuters’ article, Tesla EV charging technology is quickly gaining popularity as a potential North American standard, offering a big boost to the company's attempts to broaden access to its formerly private charging infrastructure.
Multiple automakers have recently embraced Tesla's charging design, rejecting previous attempts by the Biden administration to establish the Combined Charging System (CCS) as the dominant standard in the United States. Tesla's North American Charging Standard (NACS) is more readily accessible and reliable than the competing CCS charging network (Read: Top EV ETFs for Electrifying Gains as Charging Network Expands).
Revving Up Revenue
According to Investor’s business daily, Wall Street experts forecast Tesla's delivery to grow 74% to 445,000 units in Q2. This considerable year-over-year rise can be attributed to favorable comparisons to Q2 2022 when Tesla's Shanghai plant was temporarily closed due to COVID-19 lockdowns. Analysts predict that Tesla will supply around 1.82 million vehicles in 2023, exceeding the 1.313 million shipped in 2022.
Per Reuters, Tesla is on track to have another record-breaking quarter in China, thanks to robust sales. However, the business is facing increased rivalry from domestic rivals such as BYD, resulting in a modest loss in Tesla's market share in China's battery electric car segment. Analysts predict that Tesla will sell around 155,000 vehicles in China between April and June, a 13% rise over the previous record-breaking quarter.
ETFs in Focus
Meet Kevin Pricing Power ETF (PP - Free Report)
The fund has an exposure of 24.4% in Tesla, making it the top holding. Meet Kevin Pricing Power ETF has gathered an asset base of $37.13 million and has a basket of 17 securities. PP charges an annual fee of 0.77%.
Meet Kevin Pricing Power ETF has earned 50.55% year to date and 19.37% in the last three months.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund has 19.27% exposure in Tesla along with an asset base of $17.02 billion. XLY has a basket of 53 securities and charges an annual fee of 0.10%.
The fund has a Zacks ETF Rank #1 (Strong Buy) and a Medium risk outlook. Consumer Discretionary Select Sector SPDR Fund has generated 30.34% year to date and 18.44% in the last three months.
ARK Autonomous Technology & Robotics ETF (ARKQ - Free Report)
Employing an active strategy, ARK Autonomous Technology & Robotics ETF has an exposure of 14.59% in Tesla, making it the top holding in the fund. The fund has amassed an asset base of $1.04 billion and has a basket of 34 securities. ARKQ charges an annual fee of 0.75%.
ARK Autonomous Technology & Robotics ETF has a Medium risk outlook and has added 35.21% year to date and 16.84% in the last three months.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
Fidelity MSCI Consumer Discretionary Index ETF has an exposure of 11.99% in Tesla. FDIS has gathered an asset base of $1.19 billion. The fund charges an annual fee of 0.08%.
The fund has a Zacks ETF Rank #2 (Buy) and a Medium risk outlook. Fidelity MSCI Consumer Discretionary Index ETF has generated 28.14% year to date and 16.46% in the last three months.
Vanguard Consumer Discretionary ETF (VCR - Free Report)
Vanguard Consumer Discretionary ETF has an exposure of 13.39% in Tesla. VCR has amassed an asset base of $4.59 billion and has a basket of 309 securities. The fund charges an annual fee of 0.10%.
The fund has a Zacks ETF Rank #1 and a Medium risk outlook. Vanguard Consumer Discretionary ETF has earned 28.01% year to date and 16.44% in the last three months.