Tesla’s strong performance in the third quarter of 2024 has left investors and analysts impressed and short sellers scrambling to cover their positions. The incredible rally in Tesla stock (TSLA) on Thursday resulted in the erasure of all gains made by shorts in 2024 in just a single day.
The electric vehicle manufacturer reported better-than-expected earnings for the quarter, causing its stock price to surge by 22%. This impressive performance led to a $150 billion increase in Tesla’s market capitalization. Short sellers of TSLA suffered significant losses, with a collective $3.5 billion loss in just one day. This rally was the second-largest single-day increase in Tesla stock since it went public, indicating the magnitude of the positive reaction to the company’s results.
Tesla’s CEO, Elon Musk, shared during the Q3 earnings call that the company anticipates a 30% increase in vehicle sales for the upcoming year. This optimistic guidance played a significant role in driving the stock price higher and boosting investor confidence in Tesla’s future growth prospects. The market seemed willing to trust Musk’s assertions about the company’s growth trajectory, at least for the time being.
Analysts and investors were pleasantly surprised by Tesla’s strong results for the quarter. Expectations were initially low, with some reports suggesting that Tesla’s earnings could be underwhelming. However, the company managed to exceed these expectations, reporting a nine percent increase in revenue from the previous year. Tesla’s automotive gross margin also outperformed estimates, further fueling investor optimism.
The unexpected performance of Tesla in Q3 caught many by surprise, including short sellers who had bet against the stock. Bloomberg reported that analysts, on average, had anticipated a 10% decrease in quarterly profits for the company. However, Tesla’s actual results showcased a positive growth trend, highlighting the company’s resilience and ability to deliver strong financial performance.
The rapid turnaround in sentiment towards Tesla on the back of its Q3 results serves as a reminder of the volatility and unpredictability of the stock market. Short sellers, who had been riding the downward trend in Tesla stock earlier in the year, found themselves on the losing end after the company’s impressive earnings report. The speed and magnitude of Tesla’s rally in a single day underscore the risks associated with short selling and the potential for significant losses in a short period.
Overall, Tesla’s extraordinary rally in response to its Q3 results has reshaped the narrative surrounding the company and its growth prospects. The market’s reaction highlights the importance of staying informed and adaptable in the face of unexpected developments in the stock market. Tesla’s performance serves as a testament to the company’s ability to overcome challenges and deliver strong results, leaving investors eager to see what lies ahead for this innovative electric vehicle manufacturer.