What: Tesla Motors (TSLA -0.65%) stock jumped 10% Wednesday morning. The surge in the stock price follows the company's third-quarter earnings report, which was released on Tuesday after the market closed.
Tesla Model S. Image source: Tesla Motors.
So what: The optimistic response to Tesla's third-quarter results was likely primarily driven by the electric-car maker's better-than-expected guidance for Q4. Guiding for 17,000 to 19,000 deliveries in the fourth quarter, this implies 47% to 64% sequential growth and 73% to 93% year-over-year growth. In other words, Tesla expects its fourth quarter to be its biggest quarter yet -- by far.
Other factors that may be contributing to the market's enthusiastic response include some optimistic perspective from management on the demand for its vehicles, which noted that launch of its recent Model X SUV actually accelerated order growth for both Model S and Model X.
Now what: While the market may have been surprised by Tesla's fourth-quarter guidance, the greater insight into the company's robust growth story doesn't necessarily make the stock any more enticing. While the guidance does help to alleviate concerns about quarter-to-quarter performance, the market already had considerable faith in the demand and growth outlook for Tesla over the longer term.
