Why Tesla Stock Is Soaring After a Q1 Earnings Miss
Tesla came up short of analysts' expectations for its first quarter, yet its stock is roaring higher today. Here's why.
Tesla (TSLA) stock rallied more than 13% at the start of trading Wednesday even as the electric vehicle (EV) maker disclosed weaker-than-expected earnings and revenue for its first quarter.
In the three months ended March 31, Tesla reported revenue of $21.3 billion and earnings per share (EPS) of 45 cents, representing declines of 8.7% and 47.1%, respectively, from the year-ago period. The company attributed the year-over-year declines to a reduced average selling price of its vehicles and a decline in vehicle deliveries.
The results came up short of analysts' expectations for revenue of $22.2 billion and earnings of 51 cents per share, according to CNBC.
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However, the weaker-than-anticipated results were overshadowed by comments from Tesla CEO Elon Musk about the company's planned launch of lower-cost models and its robotaxi service.
"We've updated our future vehicle lineup to accelerate the launch of new models ahead [of the] previously mentioned start of production in the second half of 2025,” Musk said on Tesla's conference call. "These new vehicles, including more affordable models, will use aspects of the next-generation platform as well as aspects of our current platforms, and we'll be able to produce on the same manufacturing lines as our current vehicle lineup."
Musk went on to provide an update on Tesla's robotaxi plans, which he said will be called the Cybercab.
"Think of it as a combination of Airbnb and Uber meaning that there will be some number of cars that Tesla owns itself and operates in the fleet," Musk said, describing the Cybercab service. "There will be some number of cars and then there'll be a bunch of cars where they're owned by the end user. That end user can add or subtract their car to the fleet whenever they want, and they can decide if they want to only let the car be used by friends and family or only buy five-star users or by anyone at any time they could have the car come back to them and be exclusively theirs like an Airbnb."
The launch and expansion of the Cybercab service is the key driver behind many of Wall Street's more bullish price targets on Tesla stock, including Ark Invest's $2,000 price target.
Is Tesla a Buy, Sell or Hold?
According to S&P Global Market Intelligence, the consensus analyst target price for Tesla stock is $186.95, representing implied upside of 13% to current levels. Meanwhile, the consensus recommendation is a Hold.
Aside from Ark Invest, Wedbush is one of the more bullish firms on the Magnificent 7 stock.
"The focus for us and investors was around the blueprint and roadmap for growth as Musk and Tesla are facing a Category 5 storm after a Cinderella ride the last few years," Wedbush analyst Daniel Ives said in an April 24 report following the earnings release. "Last night in a much needed conference call Elon Musk finally stepped up as the adult in the room and laid the foundation for Tesla's growth strategy with most importantly a lower cost vehicle now slated for 2025 production and delivery."
Ives rates TSLA stock Outperform (the equivalent of Buy) and has a $275 price target on the shares.
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