Tesla's Stock Surge: Market Reassured by Musk's Ambitious Roadmap

Tesla shares jumped 21% as CEO Elon Musk outlined ambitious sales growth and expansion plans, including an affordable 2025 vehicle and reduced production costs. Investors wary of Musk's AI and robotaxi focus found reassurance in third-quarter results. Concerns persist over regulatory hurdles for future ride-hailing services.

Tesla's shares experienced a significant surge of nearly 21% as of Thursday, following encouraging sales forecasts by CEO Elon Musk. Investors reacted positively to Musk's prediction of 20%-30% sales growth in the coming year, which includes plans for a more affordable vehicle launch by first half of 2025. Notably, the third quarter saw production cost reductions boosting the company's margins.

The stock peaked at $258 with approximately 146 million shares exchanged, marking the largest gain since May 2013. This rally reversed previous stock declines influenced by concerns over Musk's focus on new endeavors like the robotaxi. Some analysts, however, perceive this as a relief rally, attributing gains to results surpassing expectations and possible short covering.

Despite recent shifts towards AI and robotics, Musk's ventures met skepticism due to the absence of a clear business strategy. Previous investor worries centered around reduced vehicle margins amidst bold non-automotive announcements. Nevertheless, labor and materials costs per vehicle reached record lows, contributing to better-than-expected third-quarter margins. Tesla's Full Self Driving software generated $326 million in revenue, indicating strong potential in future margin expansions.

(With inputs from agencies.)