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Why Tesla Stock Skyrocketed 49.2% in April

By Keith Noonan - May 3, 2020 at 9:42AM

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April was a fantastically exciting month for Tesla shareholders, but investors were treated to a different kind of excitement early in May.

What happened

Shares of Tesla (TSLA -0.37%) jumped 49.2% in April, according to data from S&P Global Market Intelligence. The electric vehicle stock bounced back in a big way last month after dipping roughly 21.5% in March's trading.

^SPX Chart

^SPX data by YCharts

Tesla stock slumped in March's trading as sell-offs related to the novel coronavirus hit the broader market, but the company's valuation surged in April thanks to strong production and delivery numbers, favorable analyst coverage, and an unexpected first quarter profit. The company's share price has been red hot over the last year, and good news in April prompted investors to pour back into the stock after a significant sell-off in March.

Tesla's Model Y car.

Image source: Tesla.

So what

Tesla published a document on April 2 stating that it had produced almost 103,000 vehicles and delivered roughly 88,400 vehicles in the first quarter -- record performance on both fronts for the period. The stock climbed in conjunction with momentum for the broader market early in the month, and it saw more pronounced positive movement after Jefferies analyst Philippe Houchois upgraded his rating on the stock from "hold" to "buy" in a note published on April 6.

Tesla then reported first quarter results on April 29, delivering non-GAAP (adjusted) earnings of $1.24 per share on revenue of $5.99 billion. The average analyst target had projected the company to post an adjusted loss of $0.36 per share on sales of $5.9 billion. Tesla also managed to post GAAP net income of $16 million ($0.09 per share) in the quarter, despite headwinds including the closure of its Fremont, California factory late in the quarter due to the novel coronavirus. 

Now what

Tesla shareholders got hit with another substantial swing early in May after CEO Elon Musk published a message on Twitter saying that he believed the company's stock was overvalued. Shares fell 10.4% on May 1, while the S&P 500 index dipped 2.8% in the day's trading. 

Many media outlets and analysts criticized Musk's tweet about the company's stock, with some raising the issue that his statement may have violated responsibilities to shareholders and an agreement that the CEO reached with the Securities and Exchange Commission last year to have relevant tweets reviewed by Tesla lawyers before publication.

With regard to the company's operational outlook, Tesla is aiming to restart operations at its Fremont production plant that has been shut down due to the novel coronavirus, and expand its overall manufacturing base. Chief financial officer Zachary J. Kirkhorn said during the company's first quarter call at the end of April that Tesla is still receiving many online orders for vehicles, but that the closure of the Fremont plant will have a negative impact on performance in the near term.

The company's plant in Shanghai is operating at full capacity, and the company is moving forward as planned with its initiative to accelerate production of Model Y vehicles at its Shanghai and Berlin factories. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla and Twitter. The Motley Fool has a disclosure policy.

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