Why Tesla stock popped before earnings

The Shanghai factory gets back to work — slowly.

| More on:
share price up

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Electric cars giant Tesla (NASDAQ: TSLA) is set to report earnings after close of trading tomorrow, Wednesday, April 20.

Even before the news is out, however, Tesla investors are taking a victory lap today, and Tesla stock is up 2.4% as of 12:05 p.m. ET as investors begin to place bets on what the news will hold. 

So what

Wall Street is of two minds about what Tesla will report tomorrow. On the one hand, Tesla perma-bear Gordon Johnson at GLJ Research is warning that Tesla's operating cash flow is going to come in only half as strong as the $2.3 billion that other analysts have forecast, sending Tesla's stock price plummeting tomorrow afternoon. On the other hand, Credit Suisse is raising its Tesla price target to $1,125 on the theory that earnings calculated according to generally accepted accounting principles (GAAP), at least, will be better than others expect.

(Credit Suisse sees earnings coming in at $2.56 per share, versus the $2.26-per-share consensus, reports TheFly.com.)

Now what

Whether Tesla beats or misses the precise numbers that analysts are forecasting for tomorrow, however, here's what you should actually be focusing on:

Chinese news agency Xinhua reported this morning that at long last, Tesla has resumed car production at its Shanghai factory. The reopening is going slower than predicted, however, and Tesla apparently won't be up to running even one full shift (out of four total shifts in a week) until the end of this week.

Still, the restart is happening, and that means that Tesla is getting back on track toward its goal of producing 1 million electric cars globally this year. With Shanghai alone able to cover nearly half that number, restarting production there is absolutely crucial to Tesla's success in hitting its goal this year. Expect Tesla to update investors on the status of its restart tomorrow and to confirm or deny that it can still reach its target after losing three full weeks (and counting) of production capacity in China.  

In the long term, those three weeks will probably dwindle in significance. In the short term, however, whether Tesla is forced to move the goalposts for 2022 could have a marked affect on the stock price this week. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on International Stock News

Delighted adult man, working on a company slogan, on his laptop.
International Stock News

Prediction: This artificial intelligence (AI) stock will be worth $5 trillion in 5 years

Amazon is integrating artificial intelligence (AI) across many areas of its business.

Read more »

Robot humanoid using artificial intelligence on a laptop.
International Stock News

Google must win at artificial intelligence or its search business could crumble. Does this make Alphabet an AI stock to buy?

Here's a deeper look into how Alphabet is faring in the battle for AI supremacy.

Read more »

A delivery man wearing a cap and smiling broadly delivers two boxes stacked on top of each other at the door of a female customer whose back can be seen at the edge of a doorway.
International Stock News

2 "Magnificent Seven" stocks billionaires are buying

The Magnificent Seven includes some of the most profitable and dominant tech companies in the world.

Read more »

Happy man working on his laptop.
International Stock News

Prediction: This artificial intelligence (AI) stock will be the biggest winner of 2025

Artificial intelligence will be one of the biggest growth opportunities this century.

Read more »

Legendary share market investing expert and owner of Berkshire Hathaway Warren Buffett
International Stock News

Could Warren Buffett's last move as Berkshire Hathaway CEO be buying this beaten-down "Magnificent Seven" stock?

Buffett is a value investor at his core, and he doesn't often buy shares of expensive companies.

Read more »

A woman holds a soldering tool as she sits in front of a computer screen while working on the manufacturing of technology equipment in a laboratory environment.
International Stock News

Prediction: This artificial intelligence (AI) stock will be worth $5 trillion in 3 years

Let's take a closer look at the catalysts that could propel this stock toward that valuation.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
International Stock News

This Artificial Intelligence (AI) chipmaker just got a game-changing boost from Amazon, and Nvidia investors should be paying close attention

Amazon just made a notable investment in Nvidia's top rival.

Read more »

Happy man working on his laptop.
International Stock News

A once-in-a-decade opportunity: Here's why I'm buying Alphabet stock like there's no tomorrow

Alphabet's stock rarely gets this cheap, and right now could be a once-in-a-decade opportunity to scoop up shares at a…

Read more »