10 High Risk High Reward Growth Stocks Stocks To Buy

2. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders In Q2 2024: 85

Tesla, Inc. (NASDAQ:TSLA) is the world’s biggest electric vehicle manufacturer, which also operates in other industries such as energy storage. As of Q2 2024, EVs accounted for 84% of the firm’s revenue. This reliance on electric vehicles means that Tesla, Inc. (NASDAQ:TSLA) stock struggles when global demand for EVs is slow. This has also been the case recently, as the stock is down by 21% over the past 12 months as high interest rates and depressing purchasing power coupled with margin erosion from competition in China have negatively impacted the global EV industry. However, Tesla, Inc. (NASDAQ:TSLA) enjoys substantial competitive advantages in the form of its global manufacturing base and machine learning for autonomous driving. It produced 1.85 million EVs in 2023 to enjoy substantial economies of scale and has access to 1.3. billion miles of training data for autonomous driving. Additionally, Tesla, Inc. (NASDAQ:TSLA)’s energy storage revenue doubled to $3 billion in Q2, allowing to stem some of the revenue bleeding from the EV slowdown.

Baron Funds mentioned Tesla, Inc. (NASDAQ:TSLA) in its Q2 2024 investor letter. Here is what the fund said:

“As discussed in the Fund’s prior shareholder letter, the fears about Tesla’s products were misplaced. Instead of the company being exclusively dependent on limited vehicle models and software advancement, the company announced it will more rapidly introduce products that appeal to a wider audience. It also demonstrated that its price reductions were the result of efficiencies rather than only to spur demand. Margins exceeded expectations. And the company’s integration of its hardware with proprietary AI software should facilitate full self-driving capabilities and subsequent new revenue streams. This integration of hardware with software creates a dynamic growth company as it more fully explores its potential with Optimus, humanoid robotics. The combination of these catalysts resulted in Tesla’s stock increasing meaningfully and rapidly in the second half of the quarter. This stock price momentum has continued into the next period”