Tesla stock shock: Company posts gains after earnings report

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Tesla’s quarterly earnings report and call yesterday impacted the company’s stock in a way that surprised some Wall Street analysts: It went up.

The earnings call presented a perfect alignment of revenue, Model 3 gains and overall capital, leading to an immediate 2% bump and another another 6% gain in after-hours trading. The after-hours action demonstrated that the initial reaction to the numbers for Q2 2017 is hugely positive, with the stock hitting $345.

At today’s opening bell, TSLA came in at $346.50, a huge jump from yesterday’s closing in the mid-320s.

Analysts at Baird Equity Research still view Tesla Inc ‘s stock as a “top pick for 2017, with the firm’s Ben Kallo maintaining an Outperform rating on TSLA and an unchanged $368 price target.

Piper Jaffray Analyst Alexander Potter upped his price target for the EV company from $368 to $386 after the earnings call. Potter’s new price target implies an over 18% upside for TSLA, which has increased its price by over 50% since the start of 2017.

It isn’t smart to “bet against a story with this much momentum,” Potter told TheStreet.

It’s no surprise that analysts are more bullish than they were before after the earnings call and quarterly report.

In the quarterly letter, Tesla announced that they are “averaging over 1,800 net Model 3 reservations per day” since the handover event and stated that the they have opened up the design configurator to thousands of employees as they prepare to produce more Model 3s. Automotive revenue slightly declined over the first quarter, while energy generation and storage grew 34%. Tesla attributed the gains in energy generation and storage to, “a greater percentage of cash sales and higher deployment of energy storage systems.”

Tesla also stated that, “Model S and Model X deliveries to increase in the second half of 2017, as compared to the first half of the year.”

While Tesla expects the Model 3 to carry a negative gross margin in Q3, they are expecting it to go positive in Q4. In Q3 the overall automotive gross margin is expected to dip below 20%, currently at 27.9%, before recovering and growing in Q4 and beyond.

It is expected that the Tesla stock shock will continue to go through the day as the company rides the waves of the positive analyses after yesterday’s call.

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