Tesla’s stock experienced a significant increase on Thursday following the release of its third-quarter earnings results, which were mixed. Investors responded positively to better-than-expected adjusted earnings per share and improved gross margins, coupled with the announcement that Tesla’s more affordable electric vehicle is set for production next year. CEO Elon Musk indicated during an earnings call that the company anticipates volume growth of 20%-30% for the coming year.
Midday trading saw Tesla shares climbing 18%, potentially adding billions to the company’s market valuation.
Tesla’s reported revenue stood at $25.18 billion, slightly missing analyst expectations of $25.4 billion but marking an improvement from both the $25.05 billion recorded in the previous quarter and the $23.4 billion from a year earlier. Adjusted earnings per share reached $0.72, surpassing the $0.60 forecast, with adjusted net income amounting to $2.5 billion and free cash flow hitting $2.9 billion.
The highly scrutinized gross margin was reported at 19.8%, significantly exceeding the anticipated 16.8%.
The company stated, “We delivered strong results in Q3 with growth in vehicle deliveries both sequentially and year-on-year, resulting in record third-quarter volumes. Preparations remain underway for our offering of new vehicles—including more affordable models—which we will begin launching in the first half of 2025.”
Earlier this month, Tesla reported third-quarter vehicle deliveries that fell slightly short of expectations, contributing to a dip in stock prices.
Tesla delivered 462,890 vehicles in Q3, reflecting a 6.4% increase from the previous quarter and marking the first quarter of delivery growth this year. This figure also surpassed the 435,059 electric vehicles delivered in the same period last year, although Wall Street had anticipated deliveries to be about 463,897, according to Bloomberg.
The report highlighted ongoing success with the refreshed Model 3, which resulted in higher production and reduced costs quarter-over-quarter. Additionally, Cybertruck production showed improvement and achieved a positive gross margin for the first time.
Looking ahead, Tesla expects vehicle deliveries to see “slight growth” in 2024. Musk noted the possibility of 20%-30% growth next year, described as a “best guess.”
Prior to the Q3 results, Tesla’s shares had fallen approximately 11% since the unveiling of its robotaxi, named Cybercab, during the “We, Robot” event at Warner Bros. studio lot in Burbank, California, on October 10. Investors and analysts expressed a desire for more information regarding the Cybercab and the progress of Tesla’s sub-$30,000 electric vehicle, referred to as the Model 2.