Debates around Tesla and its future have, for the past few years, centered on its stressed balance sheet, its awkward ramp-up of Model 3 production, and the erratic behavior of CEO Elon Musk.
But back when the company was worth ... about what it's worth now, it had retreated from a high-water marker for its stock in 2014 of about $300 and had established a routine pattern of declines in valuation at the beginning of the year, followed by recoveries as the year closed out.
Because Tesla is always in the news and because the stock is a battleground for investors, wild swings in the share price aren't unusual. This is abnormal for the business Tesla is in — building and selling cars, where major automakers can see their shares remain flat for years — so the trick from 2014-17 was to discern a pattern that made at least some sense.
That was the only way you could figure out if Tesla was just slightly overvalued or wildly overvalued. By the same token, big sell-offs for Tesla were sometimes overcooked. The classic example was a big drop after Tesla acquired SolarCity in 2016.
Savvy investors who thought the deal wasn't going to kill Tesla bought when shares we're below $200 and enjoyed a run to nearly $400, prior to the stock's retreat in 2018 and collapse in 2019.
Lo and behold, Tesla is once again rebounding as we prepare for the second half and for the car maker's report on second-quarter vehicle deliveries. Tesla has been telegraphing that deliveries should be a big improvement over the first quarter, which was a big drop-off from a robust close in 2018.
That speculation has pushed shares above $200 again, an important level of support for the stock. A decent Q2 should send the stock back toward $250. History has taught Tesla investors that they really don't want to miss the rallies, which tend to be dramatic.
Deliveries for Q2 should also set the stage for what could well be a return to profitability by Q3 or Q4 (Q2 is staging for a loss). The final quarter is typically Tesla's biggest, so no surprises there.
The takeaway here is that we've seen this movie before. The difference is that we're now watching it for the first time again after Tesla's nightmarish 2018 and early 2019.