After dropping 65% in 2022, Tesla stock (NASDAQ:TSLA) saw a sharp rebound in the first quarter of 2023, with the company’s market capitalization increasing by over $200 billion. The electric vehicle (EV) maker’s shares have surged 54% in 2023 so far.
Tesla’s market value rose from $389 billion to $593 billion as of writing, following a disappointing year for its shares in 2022. Thanks to Covid-related headwinds in China and Elon Musk’s turbulent Twitter purchase, TSLA lost almost two-thirds of its value last year. This marked TSLA’s worst annual percentage decline and only its second full-year drop since the company went public in 2010.
Provided that Tesla maintains its gains, this quarter would be the company’s seventh-best quarter and the most successful Q1 so far, as per MarketWatch. TSLA’s momentum may be attributed to increased optimism about the economy and the market, which have driven investors back to growth-oriented tech stocks. Apart from this, Tesla benefited from company-specific factors such as price cuts and a positive outlook on demand. The drama surrounding CEO Elon Musk’s Twitter purchase has also diminished.
In January, Tesla shares experienced their best week in a decade. This came as Musk highlighted during the Q4 earnings call that demand for Tesla vehicles significantly outpaced production. Analysts from Morgan Stanley also noted that Tesla’s January price cuts, which enabled more Teslas to qualify for tax credits, could signal a “great deflation” that would help the electric vehicle segment, which Tesla leads.
There are only a few days left before the end of the first quarter, and Tesla is firing on all cylinders to end Q1 2023 on a strong note. RBC Capital Markets analyst Tom Narayan, for his part, is optimistic about the company’s delivery results this quarter.
“We increased our forecast based on strong sales data during the first two months of the quarter and believe sales accelerated in March. Production and sales data in China seem solid, and weekly domestic sales data in the first few weeks of March is robust, which we assume continues,” the analyst noted.
Disclosure: I am long TSLA.
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