Tesla’s Third-Quarter Surge Impresses Investors
Shares of Tesla (NASDAQ: TSLA) soared this week following the release of strong third-quarter earnings, as the electric vehicle (EV) manufacturer projected exciting vehicle production growth for 2025.
The upbeat earnings report reassured investors about Tesla’s growth prospects, pushing the stock up by 15.1% as of 11:55 a.m. ET on Thursday, according to S&P Global Market Intelligence data.
Image source: Tesla.
Strong Earnings Despite Economic Headwinds
Despite rising Treasury yields—which CEO Elon Musk has noted could pose challenges—Tesla impressed investors with its solid earnings report for the third quarter.
While automotive revenue increased only slightly by 2% to $20.2 billion, the company saw a significant boost in its energy generation and services revenue, leading to an 8% rise in overall revenue to $25.18 billion. However, this total was below analyst expectations of $25.37 billion.
The real standout was Tesla’s bottom line. The company’s gross margin improved from 17.9% to 19.8%, and operating income surged by 54% to $2.7 billion. Adjusted earnings per share rose from $0.66 to $0.72, surpassing estimates of $0.58, despite a higher tax bill impacting the quarterly results.
This quarterly performance marked a reversal from a prolonged profit decline, supported by stabilized vehicle prices, layoffs from the previous quarter, and the achievement of the lowest cost of goods sold per vehicle at $35,100. Musk also shared that the Cybertruck saw its first quarterly gross profit.
Paving the Way for Future Production Growth
While Tesla anticipates flat vehicle production this year, Musk is optimistic about a projected growth rate of 20% to 30% in 2025. This news delighted investors, and the anticipated roll-out of the Cybercab next year could be crucial for boosting production.
Success in this next vehicle segment could unlock further growth for the stock. For now, investors have reason to be pleased with the return to profit growth and projected production increases in the coming year.
Where to Invest $1,000 Right Now
When our analyst team has a stock tip, it’s worth paying attention. Stock Advisor has delivered an impressive average return of 810%, outpacing the 170% average of the S&P 500.*
They recently revealed their picks for the 10 best stocks to buy right now, including Tesla, along with nine other potential opportunities.
See the 10 stocks »
*Stock Advisor returns as of October 21, 2024
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein reflect those of the author and do not necessarily represent the views and opinions of Nasdaq, Inc.
