Tesla Stock Is Rising. How It's Sidestepping the Auto Maker Carnage. -- Barrons.com

Al Root

Tesla stock rose early Monday, despite another profit warning from an auto maker peer.

Shares of Tesla maker were up 1.2% shortly after the market opened for trading, while the S&P 500 and Dow Jones Industrial Average were both about 0.2%.

The move comes after Stellantis shares dropped 12.5% to $14.06 after cutting its full-year financial guidance. The Chrysler parent now expects operating profit margins of 5.5% to 7%, down from prior guidance for "double digits." Free cash flow is expected to be negative 5 billion euros ($5.6 billion) to 10 billion euros ($11.2 billion), while prior guidance projected "positive" free cash flow for 2024.

Lower wholesale shipments in North America and increased Chinese competition were reasons cited for the cut.

Neither issue is a shock. In recent guidance cuts, auto makers Volkswagen and Mercedes-Benz cited a weakening Chinese market. What's more, Stellantis had a very difficult first half in the U.S., leaving dealer inventories elevated. Sales were down about 16% year over year.

Still, investors are taking the magnitude of the cut hard. Stellantis was dragging down the sector. Shares of General Motors and Ford Motor were down 2.6% and 2.5%, respectively.

Stellantis' woes may not mean as much to Tesla investors ahead of the EV firm's Robotaxi Day, scheduled for Oct. 10, when the company will provide some details about an upcoming self-driving taxi service.

Barclays analyst Dan Levy wrote Monday that it could be a "sell the news" event. Tesla stock has been exceptionally strong lately, in the run-up to Robotaxi Day. Coming into Monday trading, shares have gained about 24% over the past month, rising for three consecutive weeks.

The strength is a sign that most Robotaxi-related news is already reflected in Tesla stock.

Recent gains left shares up about 5% year to date and up more than 85% from 2024 lows in mid-April.

Levy rates Tesla shares at Hold with a $220 price target.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

September 30, 2024 09:55 ET (13:55 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.