Tesla’s stock surged by 15% on Wednesday following CEO Elon Musk’s announcement that the company plans to start production of new affordable electric vehicle models by early 2025. This news came during Tesla’s earnings call, where the company reported a 9% decrease in revenue compared to the previous year, its largest annual decline since 2012. The company had originally projected to begin production of the new EV models in the second half of 2025.
Tesla reported adjusted earnings per share of 45 cents on revenue of $21.3 billion for the first quarter, falling short of analysts’ expectations of 51 cents in earnings per share and $22.15 billion in revenue. The revenue drop from the previous year and quarter raised concerns, but Bank of America analysts noted that Tesla’s first-quarter results and leadership commentary “addressed key concerns” and “revitalized the growth narrative.” As a result, they upgraded the stock from neutral to buy with a $220 price target, citing optimism around the launch of new vehicle models and licensing of their driver assistance system.
Despite the positive sentiment from Bank of America analysts, UBS analysts remained skeptical of Tesla’s stock, reiterating a neutral rating and reducing their price target from $160 to $147. They highlighted concerns about Tesla’s focus on autonomy, limited growth potential for their current lineup, and ambiguity around the impact of the new vehicle models. The analysts emphasized the importance of progress in autonomy but expressed caution about the company’s short-term viability.
Overall, Tesla’s stock performance in response to Musk’s announcement indicates optimism from some analysts regarding the company’s growth prospects and future vehicle offerings. The focus on autonomy and new EV models has generated excitement among investors, leading to a surge in Tesla’s stock price. While some analysts have raised concerns about the company’s ability to deliver on its promises and sustain growth, others see potential in Tesla’s strategic initiatives and view the current news flow as positive for the stock.
The market reaction to Tesla’s earnings call and Musk’s announcement reflects a mix of skepticism and enthusiasm among analysts and investors. Tesla’s ambitious plans for new affordable EV models and expansion into driver assistance systems have sparked debate about the company’s future prospects. With a focus on innovation and technology, Tesla continues to be a polarizing stock in the market, attracting both supporters and detractors. As the company navigates challenges and opportunities in the electric vehicle industry, its performance and strategic decisions will continue to shape its trajectory in the market.
