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Frederic J. Brown/Getty
- Tesla shares have surged following the company’s earnings announcement on Wednesday.
- Wall Street analysts have analyzed the key factors driving this rally.
- Emarketer analyst Jacob Bourne noted that the “element of surprise” was a major contributor to this surge.
Tesla’s stock has experienced a remarkable rise in value over two days after reporting quarterly earnings that surpassed market expectations.
The share price rebounded from losses incurred after Tesla’s “We, Robot” event on October 10, where Elon Musk showcased the Cybercab but provided fewer launch details than anticipated by some investors, leading to a 9% drop in stock value the following day.
By Friday, two weeks later, Tesla’s shares closed at $269.19—its highest point since September 2023—and are now up by 8.33% year-to-date.
AvaTrade’s chief market analyst, Kate Leaman, remarked to Business Insider that Tesla’s earnings were an unexpected positive surprise which typically boosts stock performance.
The company reported better-than-expected profits and gross margins—a critical metric for investors. Additionally, it announced that the Cybertruck has reached profitability, with plans to begin production of more affordable electric vehicles (EVs) slated for early 2025.
Jacob Bourne from Emarketer highlighted that Tesla’s strong performance was unforeseen and emphasized that “the biggest factor” behind its stock surge was indeed “the element of surprise.” Prior to these results being released, there were concerns regarding declining demand for EVs and how recent price reductions might affect profitability.
RBC Capital Markets analyst Tom Narayan expressed astonishment at how well Tesla managed to maintain profitability despite these price cuts: “Lo and behold, this company is still able to be profitable even with price reductions.”
Dan Ives from Wedbush Securities praised Tesla’s financial results as indicative of a “Goldilocks quarter,” suggesting they were just right—neither too hot nor too cold—for investor confidence.
Bourne also pointed out uncertainties surrounding questions about Tesla’s Cybercab robotaxi service prior to its earnings report as contributing factors. Furthermore, Musk’s political activities raised additional concerns among some investors about potential impacts on sales due to his support for former President Donald Trump.
“The negative narrative turned out to be completely incorrect,” Chowdhry stated regarding these concerns about consumer behavior towards purchasing Teslas influenced by Musk’s political stance.
Narayan noted that while no lower-priced vehicle was unveiled during the earnings call nor any regulatory approval announced for fully autonomous rides yet; concrete answers were provided addressing lingering questions stemming from the Cybercab event. Musk indicated optimism regarding regulatory approvals for their robotaxi service expected next year in Texas and California while revealing ongoing testing efforts by employees in San Francisco using development applications related to ride-hailing services.
This recent rally has significantly increased Elon Musk’s net worth beyond $250 billion; as per Bloomberg Billionaires Index data available at market close on Friday his wealth stood at approximately $277 billion.
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