Once again, Elon Musk managed to buck expectations this week when the company’s stock soared despite dismal earnings results.Tesla quelled weeks of investor angst with Musk’s word on two important future products: a long-awaited affordable model and the eventual activation of a self-driving ride-hailing fleet.Still, Tesla’s stock, which had been in a free-fall heading into Tuesday’s earnings, has soared 16% in the days after. (It’s still about 35% off recent highs, though). Facebook owner Meta, on the other hand, reported relatively strong earnings for the first quarter — only to see its stock price plummet as investors worried over the cost of CEO Mark Zuckerberg’s future AI ambitions.While Musk talked cost-cutting, Zuckerberg had to warn investors the bets wouldn’t pay off immediately. Meta stock plunged in trading Thursday following the Wednesday report and is set to close down nearly 11% despite a healthy run of 27% since the start of the year.
From a bird’s-eye view, the contrasting results are confusing. How can one company be rewarded by Wall Street for a sizable earnings miss, while the other is punished despite beating expectations for the quarter?The answer is simple, but no less maddening: Elon Musk.Over and over again, Musk has been able to quell investor worries simply by appearing calm and collected on the quarterly earnings call. For a bombastic and unpredictable executive, simply showing up as “the adult in the room” is often enough to get anxious investors back on his side.Tuesday night was no different. Musk was cool heading into the quarterly earnings call, assuring investors that Tesla still had plans for an affordable model (without citing the reports that originally spooked investors) and painted a rosy picture of Tesla’s future self-driving robotaxi business.Sure, some of the blind trust in Musk’s promises may be sycophantic. The list of things Musk unfulfilled promises for Tesla runs a mile long.But Tesla’s biggest believers often remind me that the list of things Musk has pulled off against serious odds is also impressive.Industry experts and executives have told me several times over the years that Musk keeps investors’ trust by consistently defying expectations, like making a once doomed car — the Model 3 — one of the best-selling cars in the world.These moments are enough to keep the believers going, and Tesla’s stock afloat, for now.”The bears so far in 2024 have won this battle and been very right,” Wedbush analyst and noted Tesla bull Dan Ives wrote in a Wednesday morning note to clients.”But we believe the next wave of the Tesla growth story and autonomous vision is now forming and that is what we are focused on for our bullish investment thesis looking ahead.”
