Why Is Tesla Stock Surging Premarket Despite Q1 Miss?

Tesla, Inc. TSLA shares are surging in premarket trading on Wednesday after the electric vehicle maker released its first-quarter results.

Mixed Performance: While the Elon Musk-led company missed expectations on both earnings and revenue for the third consecutive quarter, there were some bright spots. 

The core auto gross margin exceeded analyst estimates, possibly due to one-time recognition of revenue from deferred full self-driving (FSD) sales, according to Gary Black of Future Fund. However, the company also reported a significant negative free cash flow.

Rallying Despite Misses: The premarket stock surge might be because the fundamental underperformance was already priced into the stock.

Positive Notes and Analyst Shifts: Despite analysts raising concerns about potentially negative sales growth in 2024, Musk maintained that sales will likely increase, albeit at a slower pace. 

Investors also reacted favorably to his comments about launching the next generation of vehicles, including more affordable models, by early 2025 or even sooner.

However, a bearish analyst believes Tesla is abandoning plans for a low-cost EV and is instead focusing on cost-cutting measures for existing models.

Following the earnings call, some analysts adjusted their outlooks on the stock:

• BofA Securities upgraded Tesla from Hold to Buy.
• Mizuho Securities maintained a Neutral rating but lowered the price target from $195 to $180.
• Needham reiterated a Hold rating.

In premarket trading, the stock soared 12.32% to $162.51, according to Benzinga Pro.

Check out more of Benzinga’s Future Of Mobility coverage by following this link.

See Also: Everything You Need To Know About Tesla Stock

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