Why are Tesla shares up nearly 4% today?

The struggling electric vehicle sector needed a stock market win, and it got one on Monday. Thanks to some good news from one of their companies, several electric car companies saw their stock prices rise during the day. Among them was the sector's poster boy, Tesla (NASDAQ: Tesla)which rose by approximately 4% vs Standard & Poor's 500 The index fell 0.4%

Li Auto beats estimates in Q4

The company that delivered the goods at the beginning of the trading week was a large Chinese company Eve maker Lee Ottowhich I reported Fourth quarter results That morning. Fortunately for all investors in the electric vehicle sector — or otherwise involved in it — Li Auto delivered a landslide victory on earnings and managed to beat analysts' revenue estimates due to increased vehicle shipments.

This helped soothe the lingering pain over Tesla's fourth-quarter performance. The US company's investors will be pleased to be reminded that the king of electric cars has missed both the top and bottom lines, with the former up just 3% year-on-year and the latter down 40%.

This, coupled with slowing growth in electric vehicle sales overall, has made investors skeptical about the industry as a whole.

Buyer awareness

This sentiment is thrown into reverse with Li Auto's numbers. The previously rising optimism in electric vehicle stocks may be returning.

However, I don't think this will lead to a long rally. Even after the recent recession, Tesla shares and more popular electric vehicle stocks still have high valuations, which in my opinion is not justified by the diminishing growth outlook. One company's performance, impressive though it may be, is not enough to make this expensive sector attractive again in the long term. However, that could change if other electric vehicle makers deliver big earnings surprises.

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Eric Folkman He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has Disclosure policy.

Why are Tesla shares up nearly 4% today? Originally published by The Motley Fool

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