Strong Earnings and Musk's Remarks Drive Stock Up 22%
Largest Daily Gain in 11 Years
Wedbush Securities Calls It an "Early Christmas Gift"
BoA and Others Raise Target Prices Continuously
Tesla's market capitalization surged by approximately 183 trillion won in a single day, alleviating concerns about the electric vehicle chasm (temporary demand slowdown) that had plagued the company since the beginning of the year. This was the result of Wall Street optimism following the release of strong third-quarter earnings and CEO Elon Musk's confident statement of '20-30% sales growth' next year.
On the 24th (local time) at the New York Stock Exchange, Tesla's stock price closed at $260.48 per share, up 21.92% from the previous session. This increase was the largest in 11 years and 5 months since May 2013. Based on the closing price, Tesla's market capitalization reached $814.1 billion (approximately 1,123 trillion won), an increase of about $132.7 billion (approximately 183.7 trillion won) from the previous session.
This surge in stock price was attributed to the third-quarter earnings report released after the previous day's market close, which recorded an earnings surprise, and CEO Musk's assertion during the earnings conference call that vehicle sales growth would increase by 20-30% next year. At the same event, Musk also roughly disclosed the launch timelines for the much-anticipated affordable electric vehicles, ride-hailing services, and the autonomous robo-taxi prototype 'Cybercap.'
Until now, Tesla's stock price had shown double-digit declines due to price wars with Chinese companies and decreased sales in the first and second quarters, diverging from the double-digit gains of the Nasdaq index this year.
Optimism is emerging inside and outside Wall Street that Tesla can overcome the slowdown in electric vehicle demand by transforming into a complex transportation, artificial intelligence (AI), and autonomous driving company.
Dan Ives, a leading Tesla bull and analyst at Wedbush Securities, described the third-quarter results as "an early Christmas gift to investors," adding that "combined with other growth drivers such as AI and autonomous driving, Tesla will eventually become a company with a market cap of $1 trillion." Wedbush's target price of $300 implies about a 15% additional upside from the closing price on that day.
There were also moves to raise target prices. Bank of America (BoA) raised its target from $255 to $265. Morgan Stanley maintained its target at $310 per share and assigned Tesla its highest investment priority as a 'top pick.'
BoA analyst John Murphy stated, "Musk's comment that vehicle sales growth will increase by 20-30% next year is reasonable," and analyzed that "Tesla will experience a second growth wave next year with affordable electric vehicles and the Cybercap business."
Edison Yu, an analyst at Deutsche Bank who set a target price of $295, also noted that the margins for automobiles and energy storage systems (ESS) in the third quarter were impressive, forecasting that "the delivery growth rate in the fourth quarter will increase significantly by 11% year-over-year."
On the other hand, some investment banks still maintain a harsh evaluation of Tesla. William Stein, an analyst at Truist Securities, gave Tesla stock a hold rating, calling Musk's growth forecast for next year "ambiguous." He questioned, "Tesla has never launched a vehicle within one year after unveiling it," and added, "Recently, no new vehicles (excluding Cybercap, etc.) have been unveiled, so which vehicle can be responsible for 20-30% growth?"
Meanwhile, Tesla's stock price surge also increased CEO Musk's net worth by more than $33.5 billion in a single day. According to the Bloomberg Billionaires Index, Musk's total net worth was estimated at $270.3 billion.
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