Breakdown of the latest developments on the global exchanges
Feb 5, 2020, 12:00 PM GMT

Tesla Shares Soar After a Crushingly Positive Earnings Report

The electric cars manufacturer surprised everyone on Wall Street on Tuesday by reporting 2 per cent boost in revenue, that has been made in Q4 2019 compared with the recorded performance for the same period a year before.

The company has been able to generate $7.4 billion in the last quarter of the year, which toppled the $7.4 billion that have been recorded a year prior.

Tesla's adjusted for one-time items EPS reached $2.14, which surpassed last year's $2 a share, and it also exceeded the consensus forecasts for $1.77 EPS.

The general outlook for a bright future of the company was additionally supported by the introductory remarks to the earnings report itself, where it was stated that:

“For most of 2019, nearly all orders came from new buyers that did not hold a prior reservation, demonstrating significant reach beyond those who showed early interest. Amazingly, this was accomplished without any spend on advertising. As more people drive our cars and as the industry rapidly validates electrification, interest in our products will continue to grow."

All of this optimism has caused the share price of Tesla to surge with over 13 per cent during Wednesday’s trading session, as investors appear to be convinced in the strengthening of the market for green cars in the future.

The general excitement was so substantial that not even fears of curbed manufacturing capacities in China due to the outbreak of the coronavirus could temper investors’ enthusiasm resulting in the price hike.

“Tesla Chief Financial Officer Zach Kirkhorn said during the call that Tesla is expecting “a one- to one-and-a-half-week delay in the ramp of Shanghai-built Model 3 due to a government-required factory shutdown” related to the virus.”

Nevertheless, the price is more than likely to experience some temporary correction in the forthcoming days, because the recent spike has bolstered the share price way above the S&P 500's average price.

Tesla shares are currently trading way above the S&P 500 and Apple Inc.; however, its long-term performance is still dependent on the performance of the tech industry as a whole and the underlying market conditions.

That is why it is likely for a convergence between the prices of the three assets to occur in the foreseeable future.

Tesla vs S&P 500 vs Apple