Tesla was considered in deep trouble until last Wednesday. Here’s what changed.
Tesla just had its best week since the start of the year, as a market rally brought stocks to almost a two-year high. The rally is set to continue next week, with the world’s second-largest electric vehicle maker surprising analysts and market investors.
The stock price was up 5.2% on Friday and jumped by 22.27% since the start of the week. Year-to-date, Tesla’s stock price is now up 13.56%. Piper Sandler analysts now brought their Tesla 12-month stock prediction to $315 from $310.
Shares of America’s largest EV maker soared after the company reported better-than-expected quarterly earnings on Wednesday.
Analysts were expecting overall disappointing results. Tesla is currently grappling with suffocating competition from China, low EV demand in the United States, and a CEO who promises more than he can give.
Chief executive Elon Musk recently disappointed investors at the event announcing the company’s new robotaxi. The new model is considered inferior to that of competitors like Google’s Waymo, whose vehicles are currently operational. Tesla’s robotaxi is not supposed to reach mass production before 2026, according to Musk’s own timeline.
And yet, Tesla surprised investors with its staggering quarterly numbers, proving it still acts as a crucial linchpin in the EV sector.
Tesla’s surprising quarterly earnings
In the period ending in September, Tesla gained 8% in revenues year-on-year at $25.18 billion, missing market expectations of $25.37 billion.
Nevertheless, profits were far higher than Wall Street expected. Earnings-per-share came in at 72 cents, compared to Wall Street’s forecast of 58 cents.
“Considering the robotaxi debacle, its recent propensity to sell off after earnings, and the perception that the stock might have been poised for a breakdown if that occurred, I believe that many traders were caught offside and that many investors found themselves underowning the shares,” Interactive Brokers’ Sosnick said.
Tesla’s earnings don’t cancel investors’ anger at Elon Musk for overpromising and underdelivering self-driving features. It also doesn’t wipe away the company’s growing competition and lack of new competitive models.
Nevertheless, analysts now believe Tesla will keep growing for the foreseeable future, something far from given until last Wednesday.
