Tesla stock closed up nearly 22% on Thursday, their biggest single-day gain in over a decade. This rise in Tesla share price is as CEO Elon Musk’s bold forecast of surging sales reassured investors he was still looking to grow its core business of selling electric cars. Tesla stock surge and rally this morning was seen after the company announced its Q3 earnings yesterday after the close of the bell. In premarket trading on Thursday, Tesla stock is currently up over 13% to $242.41.
Musk forecast 20%-30% sales growth next year, promising to launch an affordable vehicle in the first half of 2025, and said efforts to slash production costs boosted margins in the third quarter.
Tesla stock’s biggest single day rise
The Tesla stock rose to a session high price of $262.2 with volumes of roughly 200 million shares. This makes it the biggest gain for the stock since May 2013. It erased recent losses on concerns that Musk was distracted by new projects like the recently unveiled robotaxi.
At close, nearly $150 billion was added to Tesla’s market cap.
“With the stock selling off in October before its earnings announcement, some bears feel this is more of a relief rally, as results were better than feared,” said Ed Egilinsky, managing director at investment company Direxion.
What prompted the Tesla stock rally?
The sharp rally might also be attributed to some short covering, Ed Egilinsky said. Short interest on Tesla stock was 2.33% at the end of September, according to LSEG data.
Musk has been pivoting Tesla into an artificial intelligence and robotics company from an EV market leader, but has yet failed to lay out a detailed business plan for his new focus. Investors sold off Tesla shares earlier this month after a robotaxi event was short on details.
Workers have been frustrated with a decade of wages that have lagged behind inflation, while Boeing spent billions on share buybacks and paid out record executive bonuses.
Last quarter, Musk made bold company announcements about everything but cars , from driverless taxis to humanoid robots leaving investors worried about dwindling margins already squeezed by lowered prices.
“He definitely seemed more passionate and invested in it this time,” said Jessica Caldwell, head of insights at car research and buying website Edmunds.
Tesla’s Q3 earnings report
Tesla reported Q3 margin that handily beat Wall Street expectations and said that the labor and material costs of making vehicles dropped to its lowest-ever level, about $35,100.
It recorded $326 million in revenue for Tesla’s autopilot software called Full Self Driving used in Cybertruck and other autonomous features.
Musk said he expects Tesla vehicles to offer paid, driverless, ride-hailing services next year, doubling down on his promise made at the robotaxi event. But that plan is likely to face significant regulatory challenges.
Tesla stock update
Tesla shares are trading at 72.75 times its 12-month forward earnings estimates, compared with the 5.94 times for legacy automaker Ford Motor and 30.79 for technology giant Microsoft. Before yesterday’s earnings, Tesla shares were trading down 14% year-to-date. As of premarket trading this morning, Tesla stock has now managed to recoup much of those losses.
At least seven brokerages raised their price targets on the stock, with a median PT of $221, according to LSEG data.
