• Investing
  • Stock
  • Editor’s Pick
  • Economy
The Significant Deals
Stock

Tesla allays investor fears with crucial EV growth forecast, shares jump

by October 24, 2024
written by October 24, 2024

By Abhirup Roy

SAN FRANCISCO (Reuters) -Tesla’s stock shot up nearly 12% in pre-market trade on Thursday, a day after it forecast surging car sales growth, reassuring investors that CEO Elon Musk was still looking to expand the company’s core business of selling electric vehicles.

The stock jump set the company up to add around $80 billion to its market capitalization, making up for a recent erosion in value caused by concerns that Musk was distracted by new projects like the recently unveiled robotaxi, which he has said will drive future growth.

Musk has been pivoting Tesla (NASDAQ:TSLA) into an artificial intelligence and robotics company from an EV market leader, but has yet failed to lay out a detailed business plan for his new focus.

Last quarter, he made bold company announcements about everything but cars – from driverless taxis to humanoid robots – leaving investors worried about dwindling margins already squeezed by lowered prices.

On a post-earnings call on Wednesday, though, Musk forecast 20%-30% sales growth next year, promising an affordable vehicle, and said efforts to slash production costs boosted margins.

“He definitely seemed more passionate and invested in it this time,” said Jessica Caldwell, head of insights at car research and buying website Edmunds.

“I feel like so much of Tesla is tied up in the future but we need to figure out how you get there. That’s what people needed to hear and they were a little bit better in providing those details than they have been in the past.”

The results followed a flashy event this month to unveil a two-seater robotaxi dubbed Cybercab that will go into production in 2026 without a steering wheel or pedals and cost less than $30,000 to buy. The event also featured a 20-seater driverless van and humanoid robots that danced for attendees.

Disappointed by the lack of some key details on how quickly Tesla could ramp up robotaxi production and clear inevitable regulatory hurdles, investors punished the company’s stock after that event.

Musk on Wednesday said Tesla aims to produce at least 2 million Cybercabs a year.

Not all investors are likely to be mollified by Tesla’s reassurances on Wednesday.

Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management and a prominent Tesla investor, said robotaxis and AI were not the fundamental businesses he wanted Musk to focus on.

“The days were good when Elon slept at the factory. He was there every day, working. Not going on Trump rallies of all things he could be doing,” Gerber said, referring to Musk’s well-publicized support of the Republican presidential candidate. Gerber made a short-lived run for the Tesla board last year.

Tesla trades at 72.75 times its 12-month forward earnings estimates, much higher than the 5.94 times for legacy automaker Ford Motor (NYSE:F) and 30.79 for tech giant Microsoft (NASDAQ:MSFT).

Musk on Thursday said he expects Tesla vehicles to offer paid, driverless, ride-hailing services next year, doubling down on his promise made at the robotaxi event. He said the company was already testing the operations with its employees in the San Francisco Bay Area.

But that plan is likely to face significant regulatory challenges.

Musk himself acknowledged on Wednesday the potential difficulties in getting approvals in California, saying “it’s not something we totally control,” but adding “I would be shocked if we don’t get approval next year.”

For now, encouraging fundamentals of the core EV business are likely to keep the heat off Musk. Until next quarter.

“Capturing sales in today’s challenging market and streamlining operations aren’t as sexy as self-driving cabs and dancing robots,” Edmunds’ Caldwell said. “But they’re critical toward funding the company’s long-term vision for the future.”

This post appeared first on investing.com
0 comment
0
FacebookTwitterPinterestEmail

previous post
Dassault Systemes shares fall after FY24 guidance cut amid automotive weakness
next post
Europe’s top court rules for Intel to end long-running antitrust case

You may also like

BASF results down on impairments, restructuring

January 27, 2025

Nasdaq futures tumble as China’s AI push rattles...

January 27, 2025

European chipmakers slump as traders gauge DeepSeek AI...

January 27, 2025

China Vanke’s CEO, chairman resign amid growing liquidity...

January 27, 2025

Fuji Media, rocked by sexual misconduct allegations, says...

January 27, 2025

Italy’s MPS shares fall ahead of Mediobanca board...

January 27, 2025

British Land stock drops following stake sale

January 27, 2025

UMG shares rally after new multi-year pact with...

January 27, 2025

BASF shares indicated 3% lower as impairments drag...

January 27, 2025

Ryanair cuts 2026 traffic forecast amid ongoing Boeing...

January 27, 2025
Fill Out & Get More Relevant News








    Stay ahead of the market and unlock exclusive trading insights & timely news. We value your privacy - your information is secure, and you can unsubscribe anytime. Gain an edge with hand-picked trading opportunities, stay informed with market-moving updates, and learn from expert tips & strategies.

    Recent Posts

    • Procter & Gamble to cut 7,000 jobs as part of broader restructuring

      June 6, 2025
    • Shein and Temu see U.S. demand plunge as loophole for cheap goods closes

      June 6, 2025
    • Shein and Temu see U.S. demand plunge as loophole for cheap goods closes

      June 5, 2025
    • This California startup is cleaning water and removing CO₂ from the atmosphere — all at a reduced cost

      June 5, 2025

    Categories

    • Economy (245)
    • Editor's Pick (3,646)
    • Investing (504)
    • Stock (6,426)

    Latest News

    • Procter & Gamble to cut 7,000 jobs as part of broader restructuring
    • Shein and Temu see U.S. demand plunge as loophole for cheap goods closes

    Popular News

    • MBX Biosciences earns Buy rating at three investment firms
    • Analysis-China’s bond market sees more economic pain ahead

    About The Significant deals

    • Privacy Policy
    • Terms & Conditions

    Copyright © 2025 thesignificantdeals.com | All Rights Reserved

    The Significant Deals
    • Investing
    • Stock
    • Editor’s Pick
    • Economy