The ailing electric vehicle (EV) sector needed a win in the stock market, and it got it on Monday. Thanks to some good news from one of their own, numerous electric vehicle companies saw their stock prices rise that day. Among them was the sector's poster boy, tesla (NASDAQ:TSLA)which increased almost 4% compared to S&P 500 0.4% drop in the index.
Li Auto beats estimates in its fourth quarter
The company that delivered the products at the beginning of the trading week was a large Chinese company. electric vehicle maker Auto Liwho reported his fourth quarter results that morning. Fortunately for everyone invested in (or otherwise involved with) the EV sector, Li Auto achieved overwhelming earnings success and managed to beat analyst revenue estimates thanks to an increase in shipments of automobiles.
This helped ease the lingering pain of Tesla's own performance in the fourth quarter. Investors in the US company won't be happy to be reminded that the king of electric vehicles missed the mark, with the former only up 3% year-over-year and the latter dropping a dizzying 40%.
This, combined with slowing EV sales growth overall, made investors pessimistic about the industry as a whole.
Buyer beware
That sentiment was reversed by Li Auto's figures. Perhaps the growing optimism that previously underpinned electric vehicle stocks is returning.
However, I don't think this will result in a prolonged rally. Even after the recent decline, Tesla and the most popular EV stocks still have high valuations, which in my opinion is not justified by their declining growth prospects. A company's results, no matter how impressive, are not enough to make this expensive sector attractive again in the long term. However, that may change if other EV makers deliver significant upside surprises in their earnings.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Tesla. The Motley Fool has a disclosure policy.
Why Tesla Stock Is Up Nearly 4% Today was originally published by The Motley Fool
