In spite of declining revenue and tighter margins, Tesla (TSLA)’s stock experienced a remarkable increase of 63%, in the past nine months, driven by an astonishing 130% rise in its P/E ratio.
SHANGHAI, CHINA – SEPTEMBER 5, 2024 – Spectators look at Tesla’s Core Technology Optimus humanoid robot and a cybertruck off-road station car at the Bund Conference in Shanghai, China, September 5, 2024. (Photo credit should read CFOTO/Future Publishing via Getty Images)
CFOTO/Future Publishing via Getty Images
Forecast disappointments and market challenges led to volatility, yet record delivery figures and a daring pivot towards AI have caused investors to reconsider the company’s outlook. Let’s delve into what is truly propelling this growth. Separately, see how Intel may benefit from The Apple Rumor Changes Everything For Intel Stock.
Here’s an analytical breakdown of the stock’s movements into the main contributing metrics.
Tesla
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What exactly is occurring here? The stock price surged by 63%, propelled by a massive 130% increase in the P/E multiple, even as revenue decreased by 2.1% and net margin fell by 27%. Let’s investigate the reasons for these changes.
Here Is Why Tesla Stock Moved
- Q1 and Q2 showed revenue declines and mixed deliveries, but investors viewed this early-year weakness as already priced in, especially given the Model Y transition and broader EV softness.
- Q3 delivered a record 497,099 vehicles, as buyers rushed ahead of the EV tax credit expiration.
- Investor enthusiasm around autonomy—Robotaxi plans and progress on Optimus—shifted the narrative back toward AI and robotics optionality.
- Potential Trump tariffs and reduced EV subsidies may end up helping Tesla, since its lower-cost U.S. manufacturing base could strengthen its competitive position against other automakers.
- Taken together, these factors outweighed ongoing EV market headwinds, pushing the stock higher.
Our Current Assessment Of TSLA Stock
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Opinion: At present, we consider TSLA stock to be unappealing. Why is that? Take a look at the complete narrative. Read Buy or Sell TSLA Stock to understand the basis of our current viewpoint.
Risk: To evaluate TSLA’s risk, examine its declines during significant market disruptions. The stock fell approximately 54% during the 2018 correction, 61% amidst the Covid crash, and nearly 74% during the inflation shock. These are not mere fluctuations. Even with robust growth and excitement, TSLA can experience substantial declines when the markets shift. This demonstrates that regardless of the positives, major sell-offs can severely impact even well-regarded stocks.
Although TSLA stock may have experienced impressive gains recently, investing in a single stock without a thorough and comprehensive analysis can prove to be risky. The Trefis High Quality (HQ) Portfolio, comprising a selection of 30 stocks, has a history of consistently outperforming its benchmark which includes all three — the S&P 500, the S&P mid-cap, and the Russell 2000 indices. Why is this? Collectively, HQ Portfolio stocks have delivered superior returns with reduced risk compared to the benchmark index; presenting less of a tumultuous experience, as reflected in HQ Portfolio performance metrics.