Tesla’s Blowout Earnings Crush Short Sellers, Adding $150B in Market Value

Tesla delivered a knockout punch to Wall Street bears, with short-sellers taking a massive $3.5 billion hit after the EV maker’s surprisingly strong earnings report, according to reporting from Bloomberg.

Unexpected Triumph

The electric vehicle giant defied expectations with a 9% jump in quarterly profit when analysts were predicting a 10% decline. Tesla’s automotive gross margin, excluding regulatory credits, also exceeded forecasts, showing the company’s resilience despite intense EV market competition.

Growth Predictions Spark Rally

CEO Elon Musk’s bold prediction of up to 30% growth in vehicle sales next year helped trigger Tesla’s biggest one-day stock surge since 2013, adding $150 billion to the company’s market value in a single trading session. “Tesla’s guidance was extraordinary,” noted Steve Sosnick, chief strategist at Interactive Brokers.

Bears Take a Beating

Short sellers, who bet against Tesla’s success, saw their entire year’s profits of $1.7 billion evaporate, with shorts now down $1.8 billion for 2024. The percentage of Tesla’s free float held short has dropped to 2.9%, approaching what S3 Partners calls “historic lows.”

Market Sentiment Shift

“There was pent up demand for the stock to do well,” explained Dave Mazza from Roundhill Financial. “There are devoted followers, both retail and institutional, who were waiting for anything less than the worst news to pile back in.”

Future Outlook

Despite earlier concerns about self-driving vehicle developments and market skepticism, Tesla’s strong performance has restored faith in the EV sector’s growth potential. The company continues making progress on developing fully autonomous vehicles, attracting renewed investor confidence.

EVXL’s Take

This dramatic turnaround for Tesla ($TSLA) demonstrates the resilience of the EV sector’s leading manufacturer. While short-term market fluctuations grab headlines, the fundamental shift toward electric vehicles continues to accelerate. Tesla’s ability to maintain growth and profitability despite increasing competition validates the broader EV market’s strength and potential.

What do you think about Tesla’s unexpected rally and its impact on the EV market? Share your thoughts in the comments below.​​​​​​​​​​​​​​​​