Gone are the days when Tesla rose or fell 20% a day

People have generally accepted that Tesla is the most valuable car company in the world.

Gone are the days when Tesla rose or fell 20% a day

Tesla (TSLA) announced the company’s best quarterly performance in its history on the evening of July 26, Eastern Time, but investors and analysts are cautiously optimistic about this news, which shows that Tesla’s The company is maturing.

Gone are the days when Tesla rose or fell 20% a day

Tesla’s adjusted earnings per share in the second quarter were $1.45, well above the 95 cents expected by analysts. Although revenue from the sale of carbon credits has declined, the strong profitability of the automotive business still drives operating profits to record highs.

Since the zero-emission vehicles sold by Tesla can earn points, some automakers that are temporarily unable to meet the zero-emission standard will buy points from Tesla to meet the emission requirements of the regulatory agency, which is also one of Tesla’s sources of income. Tesla bears believe that this source of income will gradually shrink over time.

Tesla’s operating profit in the second quarter reached $1.3 billion, a record high

Gone are the days when Tesla rose or fell 20% a day

However, Tesla’s stock price fell after the earnings report. At the close of the market on July 27, the company’s stock price fell 1.95% to $644.78.

The lack of market response to dazzling financial reports usually occurs in companies with more mature businesses. For example, in the past 12 quarters, Apple’s (AAPL) stock price has risen or fallen about 4% due to earnings reports.

Before the second quarter of 2021, Tesla’s stock price has risen or fallen about 7% after its earnings report in the previous 12 quarters. In addition, in the four quarters of 2019, Tesla’s stock price fluctuated more than 10% after the financial report was announced in three of the quarters, but now this volatility is declining. After the 2020 quarterly financial report, Tesla’s stock price The average rise or fall is about 2.5%.

The typical situation in 2020 is that Tesla’s stock price has fallen after announcing a better-than-expected financial report. The same phenomenon will also occur in the first quarter of 2021.

This is another sign of a company’s business maturity. Performance is better than expected but a small decline in stock price is a typical performance for the stocks of listed companies. Investors always expect the company’s performance to exceed analysts’ expectations. When they do, they will often “sell after the news is confirmed.” Out” (sell the news).

The reaction of Wall Street analysts to Tesla’s latest earnings report is another sign that the company is maturing. After the earnings report, Mizuho analyst Vijay Rakesh raised Tesla’s target price by $5 to $825.

In January 2021, Royal Bank of Canada (RBC) analyst Joe Spak raised his target price from $339 to $700 after changing his view of Tesla’s business. For a large brokerage firm, such an increase is very large.

A smaller target price adjustment indicates that a company’s business is becoming more stable. Analysts believe that they have a good understanding of the company’s trends, so that they will not act on their opinions because of some incidents. Significant adjustments.

After the announcement of the financial report, analysts raised the target price of Tesla’s stock by an average of $18 to about $644, an increase of 3%. The current stock price is 1% to 2% higher than the average target price given by analysts. The average target price obtained by the S&P 500 index stocks means 7% upside.

Tesla’s stock price has hovered near the average target price given by analysts is also a sign of the company’s maturity. A year ago, the average target price of Tesla’s stock was about $225, when the stock price was above $300.

Tesla shareholders and bulls may hope that the stock price will react more when the performance is good, but for Tesla, the day when the stock price fluctuates by 20% (whether it is rising or falling) may be gone. Back again. This further proves that people have generally accepted that Tesla is the most valuable car company in the world.



This article is from the WeChat public account “Barronschina” (ID: barronschina), author: Al Lut, editor: Guo Liqun, translation: Xiaocai 36氪 published with authorization.

Copyright Notice:

Original articles in “Barronschina” may not be reproduced without permission. For the English version, see the report “Don’t Look Now, but Tesla Is a Mature Business. What It Means for the Stock.” on July 27, 2021.

(This article is for readers’ reference only, and does not constitute providing or relying on as investment, accounting, legal or tax advice.)


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