Tesla Reported Awful Earnings, Why Did The Stock Go Up?

Tesla shares closed up 12% on Wednesday, even after disappointing metrics.

Tesla’s earnings came on Tuesday, and let's just say it was just as bad as everyone expected it to be.

A revenue drop of over 9% year over year was reported, the steepest annual decline for Tesla since 2012.

Chart of Tesla Revenue by Quarter

Major Points: 

  1. Revenue dropped from $23.3 billion a year before and from $25.17 billion in the previous quarter.

  2. Net income dropped 55% to $1.13 billion, or 34 cents a share, from $2.51 billion, or 73 cents a share, a year ago.

  3. Earnings Per Share was 45 cents adjusted vs. 51 cents expected

With all of these negatives, Tesla's stock still rocketed to crazy levels after hours. Why was that?

The Big News

CEO Elon Musk revealed that the electric vehicle company plans to begin production of new affordable EV models by early 2025.

Although Reuters reported earlier this month that Musk has canceled the production of the new model, it looks as though Musk is back in business. 

The company is expecting production to start in the second half of 2015 but has not disclosed any particular details just yet. 

We can expect to see more details coming soon as Tesla is very fond of promoting new design concepts years ahead of production. 

Analyst Opinions 

Even with bad earnings coming out, it looks as though Musk was able to revitalize the company stock yet again.

Many analysts have converted their sell or neutral ratings to buy, stating that Tesla’s leadership commentary addressed key concerns and revitalized the growth narrative for the company.

Others simply can’t ignore the fall in revenue and overall earnings, as investor confidence has slumped in recent months. 

Regardless of what Musk says, EV demand is decreasing, and cheaper competition from China is spicing up the pot for Tesla, requiring the company to cut down on costs and profit margins for their vehicles. 

Tesla's big push for FSD and self-driving autonomy has cautioned some investors as the technology remains a work in progress for the company. 

Investors recognize that progress is being made, but there is still alot of work left to fix all of the kinks and inconsistencies in the platform.

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