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Why Tesla Stock Jumped on Wednesday

By Daniel Sparks - Feb 24, 2021 at 1:34PM

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Shares are rebounding after a vicious sell-off.

What happened

Shares of Tesla (TSLA 4.88%) surged higher on Wednesday. The stock rose as much as 5.6%. As of 1 p.m. EST, however, shares were up 4.6%.

The stock's gain signals a rebound from several trading days in a row of declines for the electric car maker's shares. The growth stock's rebound is likely helped by a bullish day for the overall market.

A chart showing a stock price rising

Image source: Getty Images.

So what

The S&P 500 and Nasdaq Composite were up 0.8% and 0.5%, respectively, as of this writing. It's not surprising to see Tesla shares gaining more than the overall market today, as the stock has taken quite a beating in recent trading days. As of yesterday, the automaker's recent declines had completely erased sharp gains earlier this year. At one point in early February, shares were up 24% in 2021.

Perhaps some investors thought the stock's big pullback was overdone, prompting today's 4.6% rise. The stock has returned to positive territory for the year, with shares up nearly 4% year to date.

Now what

Analysts and investors largely expect huge growth from Tesla's business this year. On average, analysts forecast Tesla's 2021 revenue to rise 53% year over year to $48.15 billion. This is in line with Tesla's guidance for vehicle deliveries to grow more than 50% this year compared to deliveries in 2020. 

"While 2020 was a critical year for Tesla, we believe that 2021 will be even more important," management said in the company's fourth-quarter update. Of course, investors should separate business expectations from stock expectations. Shares have become quite expensive after a huge run-up in 2020.

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