Please ensure Javascript is enabled for purposes of website accessibility

Why Tesla, Inc. Stock Jumped Wednesday

By Daniel Sparks - Sep 19, 2018 at 5:05PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Has Tesla stock's beating gone too far?

What happened

Shares of electric-car company Tesla (TSLA -0.06%) jumped as much as 5.3% on Wednesday, recovering from a sharp decline on Tuesday. By the end of the trading day on Wednesday, Tesla stock was up about 4.9%.

The stock's rise on Wednesday may be nothing more than a rebound from Tuesday's decline, as investors reconsider the implications of news that Tesla received a "voluntary request for documents" from the Justice Department regarding CEO Elon Musk's controversial tweet about how he was considering taking the company private.

Tesla vehicles: three cars and a truck.

Image source: Tesla.

So what

The stock's rise on Wednesday surprisingly comes amid several negative stories about the company, including former General Motors' vice chairman Bob Lutz saying Tesla can never make money on the Model 3. "The whole thing just doesn't compute. It's an automobile company that is headed for the graveyard," Lutz said during CNBC's Closing Bell yesterday after the market closed.

In addition, AutoNation CEO Mike Jackson criticized Musk's unfulfilled promise so far of a $35,000 version of its Model 3, saying, "... there's going to be a day of reckoning." Jackson said Tesla might not be around in 10 years if the company keeps up this "bait-and-switch" tactic with customers. 

Tesla stock was not only resilient amid these negative headlines but fully recovered from its losses the day before. Investors seem to have decided that Tesla's 21% decline since Musk's Aug. 7 tweet was already enough of a beating.

Now what

In the coming weeks, Tesla's Model 3 production will come back into focus. The automaker will wrap up its third quarter on Sept. 30.

In a Sept. 7 blog post, Musk said higher Model 3 production meant the company was poised to deliver more than twice as many cars than it did in the second quarter of 2018. 

Tesla reports its quarterly vehicle deliveries within three calendar days of each quarter's close.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
$709.42 (-0.06%) $0.39

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.