Tesla's shares jumped 11.8% following a stronger-than-expected third-quarter earnings report on Wednesday, despite revenue falling slightly short of analyst forecasts.
Tesla reported adjusted earnings of 72 cents per share, beating market expectations of 61 cents, while revenue reached $25.18 billion, narrowly missing expectations of $25.68 billion.
This figure represented an 8% increase from $23.35 billion in the same quarter last year. Net income also rose to $2.17 billion, or 62 cents per share, from $1.85 billion, or 53 cents per share, a year ago.
Regulatory Credits Boost Margins
A notable contribution to Tesla's profit margins came from $739 million in automotive regulatory credit revenue. These credits are purchased by other automakers who fail to meet emissions targets, benefiting Tesla, which exclusively produces electric vehicles and, therefore, has a surplus of credits to sell.
Performance by Segment
Tesla’s automotive revenue saw a modest 2% increase, reaching $20 billion from $19.63 billion the previous year. In contrast, energy generation and storage revenue surged 52% to $2.38 billion, while revenue from services, including non-warranty repairs, rose by 29% to $2.79 billion.
Production Milestones and New Models
Tesla highlighted a significant milestone in its shareholder report, reaching 7 million vehicles produced as of 22 October.
The new Cybertruck, despite facing quality control challenges, ranked as the third best-selling electric vehicle in the U.S., behind the Model 3 and Model Y.
Vehicle Deliveries and Future Outlook
Tesla's third-quarter vehicle deliveries amounted to 462,890, a 6% year-on-year increase.
However, this figure was below analyst expectations, following two consecutive quarters of declining deliveries. Tesla has responded with discounts and incentives to stimulate sales.
Despite challenging economic conditions, the company remains optimistic about modest delivery growth in 2024 and plans to launch more affordable models in early 2025.
Competitive Landscape and Market Pressure
Tesla faces intensifying competition, particularly in China, from companies such as BYD, Geely, Li Auto, and Nio. In the U.S., established automakers like Ford and General Motors are expanding their electric vehicle offerings, despite scaling back some electrification goals.
Shareholder Concerns and Political Involvement
Tesla’s earnings come shortly after a robotaxi event that left some investors seeking more clarity. The timing of the report is significant, occurring just weeks before the U.S. presidential election, with CEO Elon Musk playing an active role in campaigning for former President Donald Trump.
This involvement has raised also questions among shareholders about how Musk’s political stance might affect Tesla’s performance and stock.
At the close on (AEDT) Thursday October 24, Tesla's stock price (TSLA) was US$213.65, experiencing a decrease of 2% from the previous day. The stock saw a day low of US$212.11 and a day high of US$263.98. The company has a market cap of US$682.53 billion. After hours, it was trading around US$232.81, a gain of 19.4 points or 9.1%.
Updated - 10:05 am AEDT 24th, October 24