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Tesla Stock Erases October Loss In One Day And Cathie Wood Decides To Sell

Tesla (TSLA) stock soared Thursday, recording its best one-day gain since 2013, amid a slew of price target hikes as analysts and the overall market cheered the EV giant's third-quarter performance and Chief Executive Elon Musk's bullish conference call. However, Cathie Wood and her Ark Invest went ahead and sold TSLA shares for more than $22 million.

Cathie Wood's Ark Investment Management sold 85,456 TSLA shares on Thursday, according to the company's daily trade disclosure. Based on the closing price of 260.48, Wood sold the shares for $22.26 million.

On Thursday, firms — including Goldman Sachs, Bank of America and Wells Fargo — increased Tesla stock price targets following Tesla's third-quarter earnings Wednesday, which contained profit and margins surprises.

Bank of America hiked its price target 265, up from 255, maintaining a buy rating on the shares. The firm cited stronger-than-expected auto gross margins excluding regulatory credit as a highlight of the report, along with the Cybertruck ramp up, execution in bringing down the cost per vehicle and forecast for higher delivery volumes.

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Goldman Sachs analyst Mark Delaney raised his price target to 250 from 230. The analyst has a neutral rating on TSLA. Delaney wrote that the earnings report "is an incremental positive," with stronger margins than expected. However, the analyst added the key debates will include whether Tesla can meet its full self-driving, FSD, performance and vehicle delivery growth targets for 2025. Questions remain whether the company's margins performance in Q3 is sustainable moving forward, he added.

Canaccord analyst George Gianarikas raised the firm's price target on Tesla to 278 from 254. Wells Fargo analyst Colin Langan also hiked his price target to 125 from 120 and kept an underweight rating.

'Early Christmas Present'

Meanwhile, Wedbush Securities Dan Ives, a longtime Tesla bull, wrote that Tesla "delivered an early Christmas present for investors as the bulls got a monster margin rebound and a surprisingly strong delivery outlook for 2025."

The bullish Ives wrote that the "major overhang on the Tesla story" over the past year has been sinking auto gross margins, excluding regulatory credits, as they came under major pressure from the EV price war in China and softer EV demand globally.

"Last night we saw this all important metric spike back," Ives wrote. The analyst maintained a price target of 300 on TSLA.

Tesla's auto gross margins, excluding regulatory credits jumped to 16.8% in Q3 vs. 14.6% in Q2, according to FactSet. Many analysts put the auto gross margins, excluding regulatory credits, at 17.1% in Q3.

Tesla stock surged 21.9% to 260.48 during market trade on Thursday, retaking the 50-day moving average.

Shares fell 2% to 213.65 on Wednesday, hitting the lowest levels since early September. Prior to Thursday's market action, TSLA stock had tumbled 18% in October on negative reactions to Q3 deliveries data and the Oct. 10 robotaxi event.

Tesla Earnings

Tesla earnings unexpectedly rose 9% in the third quarter, snapping a four-quarter string of year-over-year declines. Revenue came in slightly below forecasts. Gross margins jumped, fueled by strong Tesla Energy margins and a record-low cost of goods sold. Regulatory credits were high at $739 million, though below Q2's $890 million. FSD revenue recognition also may have helped.

Tesla's CFO said the EV maker may not be able to sustain Q3's margins in Q4. Plans for new vehicles, including more affordable models, remain on track for start of production in the first half of 2025, Tesla reported Wednesday.

Tesla Earnings Unexpectedly Rise 9% In Q3, Elon Musk Bullish

Notably, Tesla expects to report higher deliveries for the full year, which will require a big gain in Q4. Tesla has ramped up incentives in the past few days, with 0% financing and higher inventory discounts.

On the Tesla earnings conference call, Musk said he expects vehicle deliveries will rise 20%-30% in 2025.

He also pegs Q2 2025 as the internal target for FSD unsupervised to be safer than a human driver.

Tesla said it's testing a ride-hailing services with employees, using a human safety driver. That hit shares of Uber (UBER) and Lyft (LYFT) early Thursday.

However, Musk also conceded that Tesla EVs with Hardware 3.0 might not be able to achieve true self-driving. He said if that's the case, Tesla will upgrade FSD customers with HW3.0 for free.

Musk said that the upcoming "affordable" EV will cost less than $30,000, "with incentives." But if that assumes the $7,500 IRA tax credit, that suggests the list price will be below $37,500, but perhaps not much more.

Tesla Stock Performance

Shares gapped far above the 50-day line and are close to a has a cup-with-handle base with a traditional buy point of 264.86, according to MarketSurge charts. Aggressive traders could have bought TSLA stock Thursday on the gap up.

Tesla stock edged up a fraction early Friday. A pause could be constructive and investors may want to wait to see if Tesla remains around current levels for a few days, or even a few weeks. TSLA stock has gone on two strong runs in the past four months but gave that all back before rebounding again.

Going into Thursday's market open, Tesla stock had dropped more than 18% in October, booking the worst weekly loss since April between Oct. 7-Oct. 11. TSLA capped that week with a 8.8% tumble, falling decisively below its 50-day line in heavy volume. The Oct. 11 sell-off followed the much-hyped Tesla robotaxi event.

Tesla Robotaxi Event: Cybercab, Robovan Unveiled; Musk Sees Self-Driving 'Next Year'

Tesla stock ranks third in the 35-member IBD Auto Manufacturers industry group. The stock has an 82 Composite Rating out of a best-possible 99. Shares also have an 89 Relative Strength Rating and a 78 EPS Rating.

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