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Why Tesla Stock Surged Higher on Wednesday

By Daniel Sparks – Nov 17, 2021 at 12:41PM

Key Points

  • Electric vehicle market hype could be helping Tesla shares.
  • The stock is still down meaningfully from a 52-week high of more than 1,243.
  • Analysts expect big growth from the automaker in the fourth quarter.

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The growth stock's rebound continues.

What happened

Shares of Tesla (TSLA 1.05%) surged on Wednesday, climbing as much as 6.2%. As of 11:05 a.m. EST, the stock was up 5.1%. This extends a gain for the stock that occurred yesterday.

The growth stock may be rising on Wednesday simply due to a rebound from last week's sharp sell-off. The stock's gain may also reflect growing buzz on Wall Street for electric vehicles.

A chart showing a stock price rising.

Image source: Getty Images.

So what

Since electric vehicle maker Rivian Automotive (RIVN -1.53%) went public last week, the electric vehicle market has received a lot of attention. Shares of Rivian and Lucid Group (LCID -3.26%) have soared, climbing 46% and 35%, respectively, over the past five trading days.

With rising interest in electric vehicles on the Street, it's not surprising to see Tesla stock rebounding from a more than 15% decline last week. Shares were pressured last week as Tesla CEO Elon Musk revealed a plan to unload 10% of his stake in the company to pay taxes.

Analysts have grown increasingly bullish on Tesla stock since the company's strong third-quarter earnings report. Earlier this month, Wedbush analyst Daniel Ives set a mind-boggling 12-month price target of $1,800 -- up from his previous estimate of $1,500. He notes that the company's improving margin profile and the potential for electric vehicles to gain more mainstream adoption has led to a major rerating for Tesla stock's valuation in September and early November. 

Now what

High expectations, of course, mean that Tesla will have to deliver near-flawless business execution in the fourth quarter and in 2022.

For Tesla's fourth quarter, analysts are modeling for more strong growth for the company. On average, they expect revenue of $15 billion, up from $10.7 billion in the year-ago quarter. More impressively, the consensus analyst forecast calls for non-GAAP (adjusted) earnings per share to increase from $0.80 in the year-ago period to $1.92.

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.

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