Tesla Gains Nearly $150 Billion in Market Value on Record Stock Surge

Tesla shares experienced a significant surge on Thursday, closing up nearly 22%. This marked the company's biggest single-day gain in over a decade, adding nearly $150 billion to its market value. The increase came following a bold forecast from CEO Elon Musk, who reassured investors about the company's focus on its core business of selling electric vehicles.

Musk projected a sales growth of 20-30% next year and announced plans to launch a more affordable vehicle in the first half of 2025. He also highlighted that efforts to reduce production costs have positively impacted the company's margins.

During the trading session, Tesla's stock reached a high of $262.2, with approximately 200 million shares traded. This gain represents the largest one-day increase since May 2013, helping to erase recent losses that had raised concerns among investors about Musk's attention being diverted to new projects, such as the recently unveiled robotaxi.

While Musk has been steering Tesla toward becoming a leader not only in electric vehicles but also in artificial intelligence and robotics, he has not yet provided a detailed business plan for this new direction. Earlier this month, shares faced a sell-off after a robotaxi event lacked specific details, leading to investor concerns.

Ed Egilinsky, managing director at investment company Direxion, noted that the stock's rally might be seen as a relief rally after a period of selling ahead of the company's earnings announcement, where results were better than anticipated.

In the previous quarter, Musk focused on announcements regarding developments beyond electric cars, which left some investors worried about Tesla's margins being squeezed by price cuts and operational costs. Jessica Caldwell, head of insights at a car research website, remarked that while much of Tesla's future seems uncertain, investors needed more clarity on how the company intends to achieve its goals.

Tesla's third-quarter results surpassed Wall Street expectations, indicating that the cost of production — the cost of goods sold per vehicle — fell to an all-time low of approximately $35,100. Additionally, the company generated $326 million in revenue from its Full Self Driving (FSD) software, a key component in its autonomous vehicle strategy.

Seth Goldstein, an equity strategist at Morningstar, stated that FSD played a role in margin expansion, but the primary driver of improved margins was the reduced cost of vehicle production. Over time, FSD is expected to contribute to higher long-term margins for the company.

Musk has indicated that he anticipates Tesla vehicles will offer paid, driverless ride-hailing services next year, reaffirming commitments made during the robotaxi reveal. However, he acknowledged that this initiative may face significant regulatory hurdles.

Not all investors were fully convinced by Tesla's reassurances. Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, expressed that while innovations like robotaxis and AI are interesting, they are not the core areas he believes Musk should prioritize. He reminisced about earlier days when Musk was more hands-on at Tesla, emphasizing the importance of his focus on vehicle production over his current public engagements.

Tesla, Stocks, Market