Selloff or Market Correction? Either Way, Here's What to Do NextSee Overvalued Stocks

Tesla stock extends gains to 12% as Bank of America upgrades to Buy

Published 2024-04-24, 06:26 a/m
© Reuters
TSLA
-

Tesla (NASDAQ:TSLA) stock surged by as much as 11.7% in premarket New York trading Wednesday after the electric vehicle (EV) maker reported earnings for the first quarter, which prompted Bank of America (NYSE:BAC) to raise its rating on shares to Buy.

The EV maker's financial results showed revenues dropping to $21.30 billion from $23.33 billion a year earlier, missing the projected $22.15 billion. 

The company's net income also took a significant hit, plunging 55% to $1.13 billion, or 34 cents per share, compared to $2.51 billion, or 73 cents a share, in the same period last year. 

Positive earnings call updates

Although Tesla experienced its largest quarterly revenue decline since 2012, reporting a 9% drop for the first quarter, investors were mostly focused on the earnings call updates. 

CEO Elon Musk announced potential earlier starts for the production of new, more affordable EV models. Initially expected in the latter half of 2025, production could now begin as early as late 2024 or early 2025, he said.

Musk also highlighted on an investor call that Tesla is advancing its artificial intelligence capabilities and is negotiating with a major automaker to license its Full Self-Driving (FSD) technology. 

Tesla maintained a cautious outlook for 2024, anticipating a slowdown in volume growth compared to 2023.

Before the post-earnings jump, Tesla's stock had fallen over 40% this year, driven by concerns over declining deliveries, increasing competition, particularly in China, and the impact of ongoing price reductions. 

This trend was underscored by an 8.5% decrease in vehicle deliveries reported earlier in the quarter.

BofA upgrades Tesla stock

In the aftermath of the Q1 earnings report and earnings call, BofA analysts raised the rating on Tesla stock to Buy from Neutral, citing wind up of positive catalysts.

He noted better-than-feared results, in addition to management commentary that “addressed key concerns heading into the quarter and revitalized the growth narrative.”

The analysts highlighted positive catalysts that are building through the rest of the year, namely new model launches coming sooner than expected, the Robotaxi event on August 8th, cost savings amid recent reports about job cuts, as well as potential licensing of FSD.

BofA maintained its $220 per share price target, which suggested an upside of more than 50% relative to yesterday’s closing price.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.