Tesla’s surprising profit spike boosts stock

Tesla announced a surprise 9% rise in quarterly profit for the third quarter, with earnings of $0.72 per share. Revenue totaled $25.18 billion, up 8% year-over-year but slightly below analyst expectations of $25.47 billion. Tesla stock surged 12% in extended trading after the earnings call.

Q3 2024 Shareholder Update → https://t.co/sXBSeLibSL

— Highlights

– Produced our 7 millionth vehicle at Fremont factory!

– Preparations for new vehicles remain underway (including more affordable models), which we'll begin launching in the first half of 2025

– Record gross… pic.twitter.com/is1UhqdH7r

— Tesla (@Tesla) October 23, 2024

On the call, CEO Elon Musk was optimistic about various aspects of the business. He noted that Tesla’s Hardware 4 has significantly enhanced capabilities compared to Hardware 3 for full self-driving (FSD) technology. Tesla recognized $326 million in FSD revenue for Q3, contributing to strong earnings and margins.

Wild to think that Tesla’s mass flux is ~4 million tons of complex manufactured goods

— Elon Musk (@elonmusk) October 23, 2024

Tesla delivered an early Christmas present for investors as the bulls got a monster margin rebound and a surprisingly strong delivery outlook for 2025 which we would characterize as an Aaron Judge-like quarter and guidance. Margins spike and 20%-30% delivery growth in 25 🏆🔥🐂🍿

— Dan Ives (@DivesTech) October 24, 2024

Musk announced that the design of the Tesla Roadster is nearing completion and more affordable vehicle models are on track for production in the first half of 2025, potentially priced below $30,000 after incentives. Tesla’s energy storage business is rapidly expanding, with projections to ship 100 gigawatt hours per year in stationary storage soon.

Tesla’s profit surge lifts stock

The Cybertruck achieved a positive gross margin for the first time in Q3. Production is set to ramp up, and the vehicle is now more affordable with recent pricing adjustments. Tesla’s cost of goods sold per vehicle hit a historic low of $35,100, significantly boosting profit margins. Despite weaker sales in the U.S. and Europe, Tesla’s performance in China drove a quarter-over-quarter increase in vehicle-unit sales. Tesla aims to achieve slight growth in vehicle deliveries in 2024, aided by incentives like 0% financing and inventory discounts in the U.S. Musk shared ambitious targets, including a ride-hailing FSD service in California and Texas in 2025, and vehicle sales growth of 20%-30% next year. Internally, Tesla aims for its FSD system to surpass human driving safety levels by Q2 2025. Analysts praised the promising track for new vehicle models and regarded the Q3 report as a “huge step in the right direction” for Tesla, noting an improvement in gross margins which suggests a focus on profitability. Tesla’s unexpected Q3 earnings increase and optimistic projections from Elon Musk have positively influenced investor sentiment, signaling strong potential for future growth in both vehicle production and energy storage sectors. The company’s shares were up 14.5% in premarket trading on Thursday.