Tesla (TSLA 5.46%) shares are down more than 10% since it reported third-quarter earnings two weeks ago. But that negative return was worse before the start of today's trading. That said, today, Tesla shares jumped and were trading higher by 5.7% as of 12:20 p.m. ET.
NASDAQ: TSLA
Key Data Points
China to the rescue?
The recent decline was spurred by underwhelming third-quarter profits and exacerbated by CEO Elon Musk's concerns regarding the macroeconomic picture for new vehicle buyers. In the conference call for investors, Musk noted: "If interest rates remain high or if they go even higher, it's that much harder for people to buy the car. They simply can't afford it."
Some of today's rally is surely due to yields on Treasury bonds dropping after the Federal Reserve kept interest rates steady yesterday. Economic data released today also showed signs of easing inflation and a slowing labor market -- more data points for investors to feel like the Fed could be finished with this rising rate cycle.
But there was more company-specific news that is also giving investors confidence to buy Tesla stock after its recent decline. The China Passenger Car Association (CPCA) reported today that Tesla delivered more than 72,000 vehicles from its Shanghai factory in October. While that is down 2.6% from the prior month, there was some hopeful news in the numbers, too.
Tesla Model 3 refresh
Tesla recently launched its revamped Model 3 sedan and began deliveries of the higher-priced version in China in late October. Overall Model 3 and Model Y sales were only slightly higher year over year, but investors hope the newly launched model could jump-start sales.
Demand in China seems strong as local electric vehicle makers there generally reported strong deliveries in October. If buyers were holding out for the new Model 3, Tesla could see a boost in sales as well as profitability in coming months.
With signs of interest rates stabilizing and perhaps even heading lower next year, investors don't want to miss out on what could be another leg of growth for Tesla. That's how long-term investors should think and is why the stock may have turned the corner after its recent slide.
