Tesla can be regarded as the “face of electric cars” in the global market. Over the past few years, Tesla has been doing quite well in the global market. However, for the past few months, the company has been falling uncontrollably. The CEO of the company, Elon Musk, has a hand in this. Nevertheless, in the past week, the shares of the electric car maker, Tesla soars 33%. This is its best week since May 2013 and its second-best week since the inception of the company. On Friday in the United States, Tesla’s stock price rose by 11%, the second consecutive intraday increase of more than 10%. This is an increase of nearly 75% from the low point in January, or about $236 million. It is also a weekly increase of more than 33%.
This follows a sharp decline in Tesla stock, which has fallen more than 40% in six months. Tesla’s stock price will fall by 65% in 2022, which is the worst year in Tesla’s 12 years since it went public. The company is feeling the pinch from higher car prices, product delays at some companies and CEO’s Elon Musk’s acquisition of Twitter amid headwinds prevailing in the tech and auto industries. However, investors’ patience has been rewarded, and Tesla’s stock price has a healthy rebound in 2023.
Tesla shares rebounded this week, thanks to its Q4 results that beat market expectations. On a conference call with shareholders and analysts, Tesla CEO, Elon Musk claims the company aims to produce 2 million cars in 2023. The company’s official guidance shows that it is on track to produce 1.8 million cars this year. It has not revised its long-term goal of achieving a compound annual growth rate of 50% over the next few years.
Tesla Q4 performance is very strong
In the fourth quarter, Tesla delivered a strong performance in terms of revenue and profit. It has a total revenue of $24.32 billion, including $324 million in deferred revenue related to Tesla’s driver assistance system. Tesla slashed prices in December and January, raising concerns about demand and inventory buildup.
Analysts had mixed reactions to Tesla’s financial results. Bernstein analyst Toni Sacconaghi, who has an “underperform” rating on the stock, wrote in a Thursday research note: “For the bulls, the growth story remains fresh and it’s doing well. For the bears, the numbers don’t lie.” In early January, Tesla reported lower-than-expected car deliveries and production in the fourth quarter.
Tesla’s stock price gains come amid a broader market rebound. For the week, the S&P 500 gained 2.2 per cent and the Nasdaq gained 4.3 per cent. Shares of other U.S. electric car makers also rose. Shares of Rivian are up 22% in a week, while shares of legacy automakers Ford and General Motors are up more than 7% each. The shares of electric car maker Lucid jumped 43% on Friday on rumours that Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, plans to take the company private.
Twitter deal took a toll on the car brand
Tesla’s poor performance last year was partly due to the fact that Musk had to focus on Twitter. He bought the social media company for $44 billion in October. Under Musk’s leadership, Twitter has experienced mass layoffs, a large number of advertisers have left, and internal morale has been low. Tesla remains the second most shorted stock in the U.S. market, behind Apple. More than 94 million shares of Tesla stock have been sold short, according to data from fintech analytics firm S3 Partners.
Ihor Dusaniwsky, managing director at S3 Partners, said that despite the rebound in Tesla shares, active short-selling continued. Short sellers believe Tesla’s rise has created “an overheated and overbought stock that will reverse, at least in the short term,” he explains.
S3 Partners statistics show that in the past week, the total number of Tesla stocks that were shorted increased by 3.9%. Also, investors who shorted the stock lost $4.3 billion during the same period.
Tesla is bouncing back
In addition to rising stock prices, Tesla’s options trading has also surged recently. According to CBOE Global Markets data, an average of nearly 3 million Tesla options contracts is now changing hands per day, up from 1.5 million a year ago and more than any other stock. Currently, Tesla averages about 7% of all options trades. Jan. 6 was the busiest day on record, with more than 5.2 million contracts traded, accounting for nearly 10% of all options.
In December, for the first time in nearly two years, Tesla options traded more than the Invesco QQQ exchange-traded fund (ETF), which tracks Nasdaq 100 stocks, for the first time in nearly two years. By July, the company consistently outperformed Apple in options trading, a notable achievement. In the S&P 500 Index (S&P 500), Tesla ranks sixth in market value, while Apple ranks first. Traders who bought the contracts had “nearly full confidence in Tesla and its technology and CEO Elon Musk. Tesla is unique, said Steve Sosnick, chief strategist at Interactive Brokers Group, which has attracted so many speculators, it also has countless fanatical followers.”
Recently, Tesla did some huge price cuts for its electric cars and this seems to be bringing the company back on track. Elon Musk claims that the price cuts are stimulating purchases in 2023 and Tesla may sell 2 million cars this year. Tesla CFO, Zach Kirkhorn claims the price cuts would dent profitability, but margins should improve as the company lowers costs. As of Wednesday’s close, Tesla shares rose 0.38%. Shares of Tesla rose 4.3% in after-hours trading following the earnings report. This is a huge positive for Tesla.
