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The impressive performance of Tesla stock on Thursday was a stark contrast to the struggles experienced earlier in 2024. Short sellers of TSLA had been enjoying gains throughout the year, but all of that was wiped out in a single day due to Tesla’s enormous rally. The company’s market capitalization skyrocketed by $150 billion, following a 22% increase in its stock price. This surge was fueled by the publication of Tesla’s Q3 2024 earnings report, which surpassed expectations and excited both analysts and investors.
Elon Musk, the CEO of Tesla, announced during the Q3 earnings call that the company was on track to achieve a 30% increase in vehicle sales for the upcoming year. This optimistic forecast was a significant factor in driving Tesla’s stock price up and causing a substantial loss for short sellers. The $3.5 billion loss incurred by TSLA shorts in a single day was a dramatic turnaround from the $1.7 billion profit they had accumulated year-to-date. By the end of Thursday’s trading, TSLA shorts were down $1.8 billion for the year, highlighting the volatility and unpredictability of the market.
Analysts and investors were taken by surprise by Tesla’s exceptional Q3 results. Despite initial predictions of underwhelming earnings, Tesla exceeded expectations by reporting a nine percent increase in revenue from the previous fiscal year. Analysts had forecasted a 10% decline in quarterly profits on average, but Tesla’s automotive gross margin, excluding regulatory credits, surpassed expectations. This unexpected positive performance further boosted confidence in the company’s future prospects and contributed to the significant rally in Tesla stock.
Steve Sosnick, the chief strategist at Interactive Brokers, highlighted the impact of Tesla’s promising guidance on investor sentiment. He noted that Musk’s assurances of sales growth had a profound effect on the market’s perception of Tesla’s potential. The market was willing to trust Musk’s projections, at least for the duration of that day’s trading. This confidence in Tesla’s future success was a pivotal factor in driving up its stock price and erasing the gains of short sellers.
The monumental rise in Tesla stock on Thursday marked one of the company’s largest single-day rallies since its initial public offering. The $150 billion increase in Tesla’s market capitalization was a testament to the market’s reaction to the strong Q3 results and the optimistic future outlook provided by Elon Musk. Despite the rollercoaster ride that Tesla’s stock has experienced throughout the year, this impressive rally served as a reminder of the company’s ability to defy expectations and capture the imagination of investors worldwide.
