January 26, 2023

Why Tesla Stock Soared Today

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Why Tesla Stock Soared Today

What happened

Shares of Tesla (NASDAQ: TSLA) jumped 11% on Thursday after the electric-vehicle (EV) maker’s financial results and guidance helped to assuage investors’ growth concerns.

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So what

Tesla’s revenue climbed 37% year over year to $24.3 billion in the fourth quarter. The auto giant’s adjusted net income surged 43% to $3.7 billion, or $1.19 per share. Those figures came in comfortably above Wall Street’s estimates, which had called for revenue of $24.2 billion and earnings per share of $1.13.

During a conference call with analysts, Chief Financial Officer Zach Kirkhorn highlighted Tesla’s impressive operational performance in a challenging market environment. “On a full-year basis, revenue increased over 50%, operating income doubled, free cash flow increased over 50%, and our margins remained industry-leading,” Kirkhorn said.

Now what

Tesla produced 439,701 vehicles during the fourth quarter and a total of over 1.3 million in 2022. Management expects the company’s production volume to grow to 1.8 million EVs in 2023. Moreover, CEO Elon Musk said Tesla could produce as many as 2 million vehicles if there are no major supply chain disruptions this year.

Musk also noted that Tesla’s recent price cuts have helped to spur demand. “Thus far in January, we’ve seen the strongest orders year-to-date than ever in our history,” Musk said. “We currently are seeing orders at almost twice the rate of production.”

Better still, Musk expects Tesla’s EVs to continue to sell briskly, even if the overall auto market contracts in a potential recession.

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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

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