Tesla is about to embark on a 2nd half rally as the company's comeback story is starting, Wedbush's Dan Ives says

• Tesla stock is set for big upside in the second half of 2024, Wedbush predicted.
• That's because the carmaker is finally a turnaround in weak demand from China, Dan Ives said.

Tesla stock is poised to rally in the second half of this year as things are finally starting to look up for the struggling electric car maker, according to Wedbush's Dan Ives.

Ives, who has extolled the growth potential of Tesla for years, said he remained optimistic about the company despite a tepid performance so far in 2024. The stock is down 18% in 2024, a loss largely driven by ailing demand for EVs, rising competition in China, and drama stemming from Elon Musk's multiple legal battles, Ives has previously said.

But those headwinds are easing, particularly as things begin to stabilize in China, Ives said. Tesla has stopped issuing price cuts on its key car models, a possible sign of firmer demand.

"They had massive headwinds in China, and now we're seeing the comeback play out," Ives said in an interview with CNBC on Friday.

Tesla's second-quarter deliveries — which the company is set to announce this week — are likely to be downbeat, but that's probably the "last of the worst news" for the carmaker, he said.

Tesla is also set to unveil its Robotaxi at an event in August — a full self-driving car model that Musk has teased for months. The release could represent a major turning point for Tesla stock, Ives said, previously calling the robotaxi a "magic model" for the company.

Those gains could be amplified if Trump is re-elected for a second term in office, as Trump is "pro-Musk" compared to President Joe Biden, who has "actively ignored" Tesla, Ives said.

Wedbush reiterated its "outperform" rating on the stock and $275 price target, implying as much as 33% upside from current levels.

"The 'comeback kids' story for Musk is starting with, of course, Robotaxi day in August. I believe this is a stock that's going to have a massive run second-half of the year." Ives said. "I think the stock's telling you … the worst is in the rearview mirror for Musk and Tesla."

Other analysts aren't so sure. Longtime investors and bank forecasters have warned Tesla could have as much as 91% downside. That's due to key issues with the company's business model, as well as the fact that headwinds to growth could last for years, Wells Fargo strategists said earlier this year.