But are they selling the news?
It has been an interesting year for Tesla (NASDAQ:TSLA) and its shareholders. The stock price was tanking in the first part of the year due to declining sales, tariffs, and CEO Elon Musk’s polarizing role in the Trump administration.
But over the past couple of months, Tesla stock has bounced back in a big way, as Musk pulled back from politics and investors anticipated higher sales.
Since dropping to around $240 per share in April, Tesla stock has surged back up to $450 per share and is up about 12% year-to-date.
The resurgence, particularly in recent weeks, had a lot to do with investors buying the rumor that Q3 deliveries, or sales, would be high. On Thursday, we learned that that was indeed the case.
Tesla reported a record 497,099 deliveries in the third quarter. This was up 7.4% from the third quarter of 2024 and 29% higher than Q2 of this year. It was the first quarter this year that Tesla posted year-over-year gains.
Model 3 and Model Y accounted for most of the deliveries, 481,166, while the sales of other models was 15,933.
Tesla also produced 447,450 cars in Q3, down from 469,796 in Q3 of 2024.
Sell the news?
The clear catalyst for the surge was the pending expiration of the $7,500 U.S. federal EV tax credit. The Trump administration ended the tax credit on September 30, so there was a rush of sales to buy Teslas and other EVs before it vanished.
This expiration date had been known for a while, so investors widely anticipated a major surge in Tesla sales leading up to it. Over the past month alone, Tesla stock has risen about 38% as investors were buying the rumor, or expectation, that sales would be high in Q3.
But on Thursday, it was a case of selling the delivery news, as Tesla stock was down about 2.5%. It is likely that many investors rode the momentum of the past month then took some profits.
While the record-breaking sales in Q3 was certainly a good thing for investors, the other side of the coin is that the incentives are no more. That will likely lead to a drop off in sales in Q4 and perhaps beyond. That may be why investors were keen to take profits now.
Most analysts expect Tesla stock to drop, as it has a median 12-month price target of $354 per share, which would be down about 21%. Price target projections range from $600, which would be up 34%, to $115 per share, which would be down 74%.
Along with the potential for declining sales, Tesla has an extremely high P/E ratio of 264, which makes it wildly overvalued.
