TSLA Stock Can Take Out New Highs Because Giga Shanghai Is ‘Coming Back With a Vengeance’

After an impressive earnings report yesterday, Tesla (NASDAQ:TSLA) is having a great day. For weeks, experts were skeptical that the electric vehicle (EV) leader could overcome negative market forces, such as factory shutdowns in China. Yesterday, Tesla reminded large- and small-scale investors why it is the leader of the EV race. It exceeded Wall Street expectations on both top and bottom lines. These numbers were enough to push shares up, but if you need another reason for a bullish play on TSLA stock, Elon Musk presented investors with plenty.

The Tesla (TSLA Stock) logo on the side of a building.
Source: Michael Vi / Shutterstock.com

The Tesla CEO’s recent quest to acquire Twitter (NYSE:TWTR) has raised some eyebrows. Tesla investors tuned into yesterday’s call wondering where his focus would be. However, it didn’t take long for everyone to see that he was there to discuss Tesla. While he acknowledged that it had been a difficult quarter, his tone was that of a CEO who is focused on doing what Tesla does — moving forward.

What’s Happening With TSLA Stock

As noted, both the earnings report and call have done an excellent job boosting TSLA stock. While shares have come down slightly since their initial spike this morning, they remain elevated. As of this writing, TSLA is up 4.2% for the day after rising more than 10% when markets opened. It is common for gains to stabilize after an early surge. However, if Musk’s statements are any indication, this may be the start of a new chapter for TSLA stock.

Let’s take a look at why he said investors should be paying attention.

‘Back With a Vengeance’

Musk knew that much of the skepticism surrounding TSLA stock came from the factory shutdowns in Shanghai. However, as CleanTechnica reports, production is resuming at the Chinese facility. And according to Musk, it isn’t just coming back. “Tesla Shanghai — Giga Shanghai is coming back with a vengeance,” he stated on the earnings call. “Notwithstanding new issues that arise, I think we will see record output per week from Giga Shanghai this quarter.”

Musk tempered expectations, speculating that Q2 production would likely be similar to what the company saw in Q1. He noted, though, that it was possible for Tesla to “pull a rabbit out of the hat” and end the next quarter with slightly higher numbers.  On top of that, he expects the following two quarters to be “substantially higher.”

For any investors who were worried about lags in production from Tesla’s Shanghai base, this should be welcome news. Musk also noted that the company is working toward a goal of producing 20 million EV units per year. While he acknowledged that they are only 5% of the way there, investors should take comfort in how well the stock is doing already. If the company keeps advancing toward the goal, as Musk has made clear it expects to, TSLA stock will only be boosted further.

“We are growing very, very rapidly year-over-year,” he noted. “And we remain confident of exceeding 50% annual growth for the foreseeable future.”

The Road Ahead

For Musk, the foreseeable future means the next few years. Investors shouldn’t be worried about the company’s ability to continue scaling production. As Musk noted on the call, both the Berlin and Austin, Texas, Gigafactories are already hard at work producing cars to meet the growing demand across Europe and the U.S. With the Shanghai factory reopening, production and distribution will continue in Asia as well. All this bodes well for TSLA stock, which can be expected to keep rising throughout the coming quarter.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/tsla-stock-can-take-out-new-highs-because-giga-shanghai-is-coming-back-with-a-vengeance/.

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