- Tesla stock has surged since the company reported earnings on Wednesday.
- Wall Street analysts broke down the factors they believe are fueling the rally.
- Emarketer analyst Jacob Bourne said the “surprise element” was the biggest contributor.
Tesla’s stock price has been on a tear in the two days since the carmaker reported quarterly earnings that exceeded expectations.
The stock regained the ground it lost following Tesla’s “We, Robot” event on October 10, during which Elon Musk showed off the Cybercab. He was lighter on launch specifics than some on Wall Street wanted, and the stock fell 9% the following day.
Two weeks later, Tesla closed the week with a share price of $269.19 on Friday — its highest since September 2023. The stock is now up 8.33% since the start of the year.
AvaTrade’s chief market analyst, Kate Leaman, told BI that Tesla’s earnings were a “surprise beat, which always gives the stock a push.”
Tesla announced better-than-expected profit and gross margin, a closely watched number. It also announced the Cybertruck hit profitability and said it was on track to start production for more affordable EVs in the first half of 2025.
Jacob Bourne, an analyst at Emarketer, a sister company to Business Insider, said Tesla’s strong results were not expected and “the biggest factor” behind the stock surge is “the surprise element.” Ahead of the earnings report, analysts had concerns about waning EV demand and the impact of Tesla’s price cuts on its profitability.
RBC Capital Markets analyst Tom Narayan said: “Low and behold this company is able to still be profitable even with price cutting.”
Dan Ives, a Tesla bull and an analyst at Wedbush Securities, called Tesla’s earnings figures a “Goldilocks quarter.”
Emarketer’s Bourne said questions about Tesla’s Cybercab robotaxi were a factor that contributed to uncertainty ahead of its earnings report. Musk’s political activism was another, Bourne said.
Global Equities analyst Trip Chowdhry told BI that there had been questions about whether some people would stop buying Teslas because of Musk’s support for former President Donald Trump.
“The negative narrative was proven to be 100% wrong,” Chowdhry said.
Narayan said while Tesla didn’t unveil a lower-price vehicle in the earnings report or announce regulatory approval for fully autonomous rides, the company did provide some concrete answers to lingering questions from the Cybercab event.
Musk said he expected the company’s robotaxi service would gain regulatory approval in Texas and California next year and that Tesla employees in the Bay Area already were testing the ride-hailing service with the development app.
For Musk, the stock rally boosted his net worth to over a quarter trillion dollars.
The Tesla CEO’s net worth was $277 billion at market close on Friday, according to Bloomberg’s Billionaires Index.
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