Tesla's stock (Nasdaq: TSLA) has been on quite the journey. Ultimately, it gained 450% between June 2019 and its peak in February with a nearly 50% gain in the first six weeks of the year. While the latter part of the stock's move was due to being a momentum, cult stock in a frothy environment coupled with a short squeeze, the initial part of its rally was the company proving its doubters wrong by successfully increasing production of its cars while maintaining quality.
Earnings
During the coronavirus crash, the stock was down by 63%. And during the market's rebound, it's gained 150%. Given that the stock quickly recovered the bulk of its losses, investors are betting that the economic deterioration won't affect Tesla's outlook. The stock gapped up to $869 which was 10% below its all-time high following its first-quarter earnings report.
Its results exceeded expectations with a $1.24 per share in profit and $5.99 billion in sales which was above expectations of $0.39 per share loss and $5.9 billion of revenue. In the first quarter, the company was able to navigate shutdowns stemming from the coronavirus better than expected, but it did pull second-quarter guidance and warned of more extensive shutdowns in March and April.
Investors are seemingly willing to look past Tesla's short-term results and focus on its long-term potential especially as the company shook out naysayers by expanding its capacity to produce 500,000 cars per year last year. As simply a car company, Tesla's stock doesn't make sense especially compared to the valuations of other vehicle manufacturers. It makes more sense as the leader in autonomous driving and batteries.
Musk's Tweets
It was a little more than a year ago when CEO Elon Musk got into trouble with the SEC with his infamous "420" tweets on 4/20. While last year he attempted to manufacture a short squeeze in the stock by hinting that the company was going private, this year he tweeted, "Tesla stock price is too high IMO". In response, Tesla's stock price dropped by 10%.
He continued with more tweets about selling his home and physical possessions and protesting the lockdown as being antithetical to US values. On Tesla's conference call, Musk went on a profane tirade against the shutdown and labeled it "unconstitutional" and "facism". The orders have led to severe restrictions on the plant's operations in the Bay Area, Shanghai, and Buffalo and led to the company cutting pay and furloughing workers.