Tesla Stock Surges Despite Earnings Miss as Musk Signals New Affordable Models

Tesla's stock surges despite weaker Q1 earnings, as investors focus on Musk's plans for affordable EVs and autonomous tech, signaling the company's long-term growth potential.

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Emmanuel Abara Benson
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Tesla Stock Surges Despite Earnings Miss as Musk Signals New Affordable Models

Tesla Stock Surges Despite Earnings Miss as Musk Signals New Affordable Models

Tesla's stock surged as much as 14% in Wednesday trading, despite the electric vehicle maker reporting weaker-than-expected first-quarter earnings. The company's net income fell 55% and revenue slid 8.7% compared to the previous year, missing Wall Street estimates.

However, investors seemed encouraged by CEO Elon Musk's comments signaling the introduction of a new lineup of more affordable Tesla cars within the next year. On the earnings call, Musk hinted that a refresh of Tesla's vehicle models might come as soon as the end of 2024, with cheaper models built on the company's next-generation EV platform.

RBC analyst Tom Narayan upgraded Tesla stock to 'Buy' and reiterated a $220 price target, representing a potential upside of 35%. Narayan said the Q1 numbers were "background noise" and outlined a four-part plan that could drive significant upside for Tesla, including new model launches, a robotaxi event showcasing its self-driving technology, cost savings, and potential licensing of its self-driving software to other automakers.

Tesla addressed fears of potential production halts and cost overruns, claiming the new vehicles would be manufactured on the same production lines as current models. The company said these affordable models will utilize aspects of its current and next-generation platforms, allowing them to increase vehicle volumes in a more capital-efficient manner.

Musk also suggested that Tesla should be viewed as an AI or robotics company, not just an automotive company. This transition has prompted analysts to reconsider their Tesla valuations, as the company's longer-term ambitions extend beyond traditional carmaking. Tesla plans to showcase its robotaxi, or "cybercab," on August 8th.

Why this matters: Tesla's ability to handle challenges and focus on future growth opportunities, such as affordable models and autonomous driving technology, is essential for the company's long-term success. As the EV market becomes increasingly competitive, Tesla's strategic moves and innovations will shape the industry's trajectory and have far-reaching implications for consumers and investors alike.

Despite facing challenges like slowing EV demand and increased competition, Tesla's focus on affordable models and autonomous technology appears to be driving investor optimism. Morningstar analyst Seth Goldstein raised his fair value estimate for Tesla shares, viewing them as undervalued, and believes affordable vehicles will generate a majority of Tesla's total deliveries by 2030. While some analysts remain cautious on Tesla's near-term viability, others have praised Musk's performance on the conference call and his roadmap for growth.

Key Takeaways

  • Tesla's Q1 earnings missed estimates, but stock surged 14% on growth plans.
  • Musk hinted at new affordable Tesla models by end of 2024 on the next-gen platform.
  • Analyst upgrades Tesla to 'Buy' on new models, cost savings, and self-driving tech.
  • Tesla plans to showcase its robotaxi technology on August 8th.
  • Analysts see affordable Tesla models driving the majority of deliveries by 2030.