- Tesla’s stock is up 63% this year so far thanks to investor optimism and strong Q4 earnings.
- Shares in Elon Musk’s EV maker have erased almost all of their 2022 losses in just six weeks.
- It shed over $700 billion in market value last year as interest rates rose and Musk took over Twitter.
Stock buybacks have hit record levels this year but they’re about to get hit by taxes. These 10 companies have been the biggest buyers of their own shares in 2022.
3. Meta Platforms
5. S&P Global
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10. Morgan Stanley
Tesla‘s stock has started the year with a breakaway rally that’s clawed back almost all the electric-vehicle maker’s losses from a hellish 2022.
Shares are up 63.4% year-to-date, trading at just over $201 as of Wednesday’s closing bell.
That gain means that Tesla is close to erasing the $700 billion wipeout it suffered last year, just six weeks into 2023.
The stock slumped 65% in 2022 as rising interest rates dampened investors’ appetite for riskier bets and shareholders worried that Elon Musk’s chaotic $44 billion takeover of Twitter would drag on Tesla’s share price.
But Tesla has staged a dramatic comeback in the early going of this year, thanks to investors’ growing faith that interest-rate cuts are coming and a strong fourth-quarter earnings report that beat Wall Street forecasts.
The Federal Reserve has raised the cost of borrowing from near-zero to around 5% over the past year, in a bid to tame soaring prices. But a growing number of traders think the US central bank will start cutting rates later in 2023, given inflation has fallen six months in a row.
Rate cuts would typically boost growth stocks like Tesla, as they juice up the future cash flows that make up a core part of their valuations.
Expectations of rate cuts have boosted most equities in 2023, with the S&P 500 up 7% and the tech-heavy Nasdaq Composite climbing 14% year to date.
But Tesla has beaten those benchmarks, in part because of its most recent earnings report and an aggressive price-cut strategy that appears to be paying off as rival automakers scramble to match the move.
The carmaker logged earnings-per-share of $1.19 for the three months up to December 31 – way clear of Wall Street’s $1.05 forecast, according to Refinitiv.
Its fourth-quarter revenue grew 37% year-on-year to $24.3 billion, narrowly beating analysts’ $24.1 billion target. The and could show shareholders that recent aggressive price cuts have helped to revive previously faltering demand.
In January, Tesla slashed the US prices of its Model 3 sedan and Model Y SUV by as much as 20%. While those cuts will dig into the company’s margins, Bank of America strategists believe they could boost sales.
That means Tesla could rally 35% this year, as its recent price cuts have already been a success in China, Wedbush’s Dan Ives has said. Loup Ventures’ Gene Munster is also positive on the company, even though he believes the cuts will put pressure on earnings.
Read more: Tesla’s stock is getting trounced by EV challenger Lucid, which is leading techs’ 2023 rally thanks to Saudi takeover rumors