Tesla shares bounce as worst-case fears subside

news7f01/26/2023

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Tesla shares bounce as worst-case fears subside

Tesla CEO Elon Musk looked sleepy during the electric vehicle maker’s earnings call late Wednesday. That’s not surprising given the time it takes to try debt reduction at Twitter, appear in courtresearching rocket designs and staying up late on a call with Tesla’s AI team.

Musk did his best to sound excited about Tesla’s business when he warned of a “severe” recession this year – twice as many as his recent one. upbeat economic rhetoric — before announcing a delay of Cybertruck production to the summer of mid-year, with “volume production” starting in 2024. The company’s volume growth guidance for 2023 is 38% as well. 50% lower than the long-term target.

And yet, Tesla stock (TSLA) rose as the earnings call played out and was up nearly 7% in premarket trading on Thursday. The ticker code is trend on the Yahoo Financial Platform.

“Strong demand story and commentary from Musk on Tesla’s earnings call,” Wedbush analyst Dan Ives and Tesla commentator say on Twitter. “Volume looks strong from the start of January after the drop and China is the main driver. In our opinion, this is bullish and the actual delivery numbers are set for 2023. The street will digest this well.”

So what happened here, exactly? Looks like Musk and his team did just enough in the minds of many investors to eliminate the worst case scenario for stocks in short term. According to the experts, that worst-case scenario would be a retest of the 52-week low around $101.

In essence, investors are betting that Tesla’s stock bottomed out weeks ago.

SAN FRANCISCO, CALIFORNIA - JANUARY 24: Tesla CEO Elon Musk leaves the Phillip Burton Federal Building on January 24, 2023 in San Francisco, California. Musk testified at a court hearing in connection with a lawsuit that had investors suing Tesla and Musk over his August 2018 tweets saying he was taking Tesla private with a grant he had raised. he guaranteed. The tweet was found to be false and cost shareholders billions of dollars as Tesla's stock price began to fluctuate wildly allegedly based on the tweet. (Photo by Justin Sullivan/Getty Images) — Tesla CEO Elon Musk leaves the Phillip Burton Federal Building on January 24, 2023 in San Francisco, California. (Photo by Justin Sullivan/Getty Images)

EvercoreISI analyst Chris McNally wrote in a note to clients: “Investors now appear willing to underwrite a strong ~$100 rebate.”

Here’s what Yahoo Finance heard about the earnings call that may be boosting Tesla’s stock:

The 2023 Cybertruck production has been confirmed (skip the pushed out timeline).
Chief Financial Officer Zach Kirkhorn dismissed the notion that the recent price drop will send Tesla’s gross margin below the critical 20% by 2023.
$22 billion plus cash on balance is a good position for Tesla to be in the current economic climate.
The demand signal appears solid after the recent price drop.
The new model is said to be in development, with details likely to arrive on March Investor Day.