Tesla (NASDAQ:TSLA) stock rose nearly 12% overnight on CEO Elon Musk’s promise of “cheaper models” in 2025. However, these will not include the long-awaited Model 2.
Instead, Musk said Tesla will use its current platforms and production lines to deliver lower-cost vehicles.
Tesla reported net income of $1.13 billion, 45 cents per share fully diluted, on revenue of $21.3 billion for the first quarter. The numbers were all below last year’s figures and analyst estimates.
Yet TSLA stock opened April 24 at $161 per share, a market cap of $533 billion.
Dead Cat? Or Hepcat?
The overnight rise could be a “dead cat bounce,” shorts covering after a fall of 42% so far in 2024. It could also represent new confidence that the company has a clear growth path.
Longtime bull Dan Ives of Wedbush raised his price target on TSLA stock to $275, calling Musk “the adult in the room” during his conference call. Bears like Alliance Bernstein analyst Toni Sacconaghi, however, were unconvinced.
While the short-term outlook is challenged, CFRA analyst Garrett Nelson noted that gross margins were ahead of projections at 17.5%, and the company is making 1,000 Cybertrucks each week. The shareholder letter also expressed confidence in growth for its software and battery revenues.
Musk insisted on the conference call that it is “fundamentally wrong” to consider Tesla just a car company. “We should be thought of as an AI or robotics company,” he insisted.
That’s how Tesla has been valued until now. As I’ve reported, Tesla is by far the most valuable car company in the world, with its current net worth over $200 billion ahead of Toyota Motor (NYSE:TM), which is in second. It is worth about 10 times more than either Ford Motor (NYSE:F) or General Motors (NYSE:GM).
TSLA Stock: What Happens Next?
TSLA was a growth stock, but its slowdown made it a “belief stock” once more. If you buy or hold Tesla today, it’s because you believe more in the vision of Elon Musk than its disappointing numbers.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
