Elon Musk makes the ‘most valuable apology of all time’ on Tesla's earnings call

  • Tesla shares are surging after Elon Musk apologized to Wall Street analysts over his behavior on the company's previous conference call.
  • Three months earlier, the stock plunged in after-hours trading in response to what Musk called "boring, bonehead questions" from analysts.
  • This time, Musk showed contrition and Tesla shares surged 8.5 percent in after-hours trading Wednesday, adding about $4.75 billion to the stock's value.
  • KeyBanc Capital Markets called it "maybe the most valuable apology of all time."

Wall Street is happy over Tesla's quarterly results and guidance, but Elon Musk's apologies to analysts may make investors even happier.

On Wednesday's post-earnings conference call, Tesla took its first questions from the two analysts Musk had dismissed three months earlier, when the company reported first-quarter results. That day, the stock plunged in after-hours trading in response to what Musk called "boring, bonehead questions" from analysts.

This time, Musk showed contrition and Tesla shares surged 8.5 percent in after-hours trading Wednesday, adding about $4.75 billion to the stock's value. The stock closed up 16 percent Thursday.

"My apologies for not being polite on the prior call," Musk said, blaming his behavior in part on a lack of sleep and overwork.

"I appreciate that," said Bernstein analyst Toni Sacconaghi, in response. "Thank you."

And Wall Street took notice that perhaps Tesla's chief executive will not distract investors with problematic behavior going forward.

KeyBanc Capital Markets called it "maybe the most valuable apology of all time."

"Elon Musk apologized multiple times for his inappropriate behavior on last quarter's call," analyst Brad Erickson said in the note to clients Wednesday. "TSLA's forward commentary was mostly better than feared, … and the CEO worked to restore some faith and credibility with investors that he can be a plus to the investment narrative, not a minus."

Erickson reiterated his sector weight rating for Tesla shares due to the company's high valuation.

The electric car maker's second-quarter earnings per share loss of $3.06 was lower than analysts' expectations of a $2.92 loss, but the company backed its prior forecast for profitable third and fourth quarters.

Tesla said it is now aiming to produce 6,000 Model 3 vehicles per week, which it hopes to achieve by the end of this month.

Piper Jaffray reiterated its overweight rating for Tesla shares, saying the company's report may be a positive turning point for the company.

"This could be the start of something big. A few years from now, investors may conclude that 2Q18 was the quarter in which Tesla cemented its position as a truly formidable player in the global automotive market," analyst Alexander Potter said in a note to clients Wednesday.

Potter raised his price target to $389 from $369 for Tesla shares, representing 29 percent upside to Wednesday's close.

One analyst took solace in Tesla's statement on its conference call that the company does not plan or need to raise more capital.

"Tesla reiterated earnings and positive cash flow guidance, and the company has no plans to raise equity capital," Nomura Instinet analyst Romit Shah said in a note to clients Thursday. "A major step function up in Q3 revenue will strongly counter the popular narrative around bankruptcy risk, thus reducing an estimated $12 billion in short interest and driving shares higher."

Shah reaffirmed his buy rating and $450 price target for Tesla shares.

Here's what all major analysts are saying about Tesla.

— CNBC's Michael Bloom contributed to this story.

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