- Tesla stock rises despite CEO's sleepy performance and Cybertruck production delay.
- Investors optimistic about Tesla's future.
- Positive signals for demand, new model under development and strong cash position.
On Wednesday night, Tesla CEO Elon Musk participated in the company's earnings call, during which he discussed a variety of topics related to the company's performance and future plans. Despite the fact that Musk sounded tired on the call, likely due to his busy schedule which includes trying to reduce debt at Twitter, appearing in court, studying rocket designs, and working late with the Tesla AI team, he did his best to sound enthusiastic about Tesla's business.
During the call, Musk warned of a "severe" recession this year, doubling down on his recent downbeat economic rhetoric. He also announced a delay in the timeline of Cybertruck production to the summer of 2023, with "volume production" commencing in 2024. The company's volume growth guidance for 2023 of 38% was also below a long-term target of 50%.
Despite these announcements, Tesla stock (TSLA) rose as the earnings call went along and is up nearly 7% in premarket trading on Thursday. The ticker is trending on the Yahoo Finance Platform. Wedbush analyst and Tesla commentator Dan Ives said on Twitter, "Demand story and commentary from Musk strong on Tesla’s earnings call. Volumes look strong out of the gate in January post price cuts and China a key dynamic. In our opinion this was a bullish call and realistic delivery numbers set for 2023. Street should digest this well."
So what happened here, exactly? It appears that Musk and his team did just enough in the mind of many investors to remove the worst-case scenario for the stock in the near-term. That worse-case scenario, pros say, would be a re-test of the 52-week low around $101. In essence, investors are betting that Tesla's stock bottomed weeks ago.
EvercoreISI analyst Chris McNally wrote in a note to clients, "Investors now seem willing to underwrite ~$100 hard downside," and "Elon was optimistic on the call."
Some of the highlights from the earnings call that may be fueling Tesla's stock include: the confirmation of 2023 Cybertruck production (despite the pushed out timeline); CFO Zach Kirkhorn pushing back on the notion that recent price cuts will send Tesla's gross margin below the key 20% level in 2023; the fact that Tesla has over $22 billion in cash on its balance sheet, which is a good place for the company to be in the current economic climate; positive signals for demand following recent price cuts; and the announcement that a new model is under development, with details potentially coming at a March investor day.