Once again, Elon Musk managed to thwart expectations this week when the company’s shares soared despite dismal results.
Tesla eased weeks of investor angst with Musk’s word on two important future products: a long-awaited affordable model and the possible activation of a fleet of autonomous vehicles.
Yet Tesla’s stock, which was in freefall before Tuesday’s earnings release, soared 16% in the days that followed. (That’s still about 35% below recent highs).
Facebook owner Meta, by contrast, reported relatively strong first-quarter profits – only to see its share price fall as investors worried about the cost of CEO Mark Zuckerberg’s future AI ambitions .
While Musk talked about cost cutting, Zuckerberg had to warn investors that the bets would not immediately pay off.
Meta stock plunged Thursday after Wednesday’s report and is expected to close nearly 11% lower despite a healthy 27% gain year-to-date.
Seen from a bird’s eye view, the contrasting results are confusing. How can one company be rewarded by Wall Street for a significant revenue shortfall, while the other is punished despite beating expectations for the quarter?
The answer is simple, but no less infuriating: Elon Musk.
Time and again, Musk was able to allay investors’ concerns simply by appearing calm and collected during the quarterly earnings conference call. For a bombastic and unpredictable executive, simply presenting himself as “the adult in the room” is often enough to bring anxious investors back to his side.
Tuesday night was no different. Musk was calm heading into the quarterly earnings call, assuring investors that Tesla still had plans for an affordable model (without citing the reports that initially spooked investors) and painting a rosy picture of Tesla’s future autonomous robotaxi business.
Of course, some of the blind trust in Musk’s promises may be sycophancy. The list of things Musk didn’t hold for Tesla goes on for a mile.
But Tesla’s biggest supporters often remind me that the list of things Musk has achieved against all odds is also impressive.
Industry experts and executives have told me repeatedly over the years that Musk maintains investor confidence by constantly defying expectations, for example by making a once-doomed car – the Model 3 – one of the best-selling cars in the world.
These moments are enough to keep believers and Tesla stock afloat, for now.
“The bears so far in 2024 have won this battle and been absolutely right,” Wedbush analyst and Tesla bull Dan Ives wrote in a note to clients Wednesday morning. “But we believe Tesla’s next wave of growth and autonomous vision is forming and that’s what we’re focusing on for our bullish investment thesis going forward.”
businessinsider
