Topline
Tesla delivered stronger third-quarter profits than Wall Street expected Wednesday, as Elon Musk’s electric vehicle maker reported its first year-over-year bottom line growth of 2024 much to investors’ delight.
Tesla CEO Elon Musk appears at a town hall in Pennsylvania supporting Donald Trump.
Key Facts
Tesla brought in $0.72 in adjusted earnings per share ($2.51 billion net income), while consensus analyst estimates called for $0.59 EPS ($2.01 billion net income), according to FactSet.
On the top line, Tesla reported $25.18 billion in revenue, below forecasts of $25.47 billion.
Tesla’s sales and net income gained 8% year-over-year, ending a streak of four consecutive quarters of year-over-year profit declines as the company says it’s between “two major growth waves.”
In the earnings announcement, Tesla noted it expects “slight growth” in vehicle deliveries this year, another positive surprise compared to expectations, as consensus forecasts called for deliveries to slip from 2023’s 1.81 million to 1.78 million.
Shares of Tesla shot up about 12% in limited trading after the earnings release, eating into the more than 15% in October loss as of the conclusion of Wednesday’s normal trading hours, with gains accelerating as Musk took the microphone at the 5:30 p.m. EDT earnings call.
Among the bullish nuggets Musk shared included a prediction Tesla deliveries would grow by 25% to 30% next year and that he expects its self-driving taxi service to launch in California and Texas in 2025.
Surprising Fact
Tesla’s after-hours rally equates to a whopping $81 billion in added market capitalization.
Big Number
$739 million. That’s how much in automotive regulatory credits Tesla reported for the quarter, well above estimates of $539 million. The credits, which Tesla sells to gasoline car companies so they can comply with government regulations, are a major profit driver for Tesla, as the EV maker can sell them at essentially 100% margins. The company’s earnings release noted other car manufacturers “are still behind on meeting emissions requirements.”
Key Background
Wednesday’s earnings report caps a whirlwind three-week stretch of major catalysts for Tesla stock. The company reported its Q3 vehicle deliveries Oct. 2, which sent shares down 3% as investors reacted to the 462,890 deliveries, which topped consensus expectations but fell short of some firms’ 470,000 forecasts. Tesla’s Oct. 10 robotaxi day caused an evening steeper selloff, as shares tanked 9% during the following trading session as analysts widely panned a lack of details and firm timelines on the company’s self-driving vehicles at the center of the event. Musk, who owns about 13% of the company’s outstanding shares and has another 9% stake pending a yearslong fight in Delaware court, is the world’s richest person with a roughly $245 billion net worth, according to Forbes’ calculations. Shares of Tesla lost almost 15% year-to-date through Wednesday’s market close, moving against the benchmark U.S. stock index S&P 500’s more than 20% rally. Musk has told investors to only hold Tesla stock if they believe his company can solve autonomous driving.
Surprising Fact
Prior to the Q3 earnings report, consensus forecasts called for Tesla to report its worst yearly net income since 2020 this year, with profits expected to decline more than 45% from 2022’s record.
Tangent
In addition to Tesla’s packed October, it’s been a busy period for Musk, who has appeared several times on the campaign trail in support of former President Donald Trump. Musk donated some $75 million to a pro-Trump group across July, August and September. Musk’s support for Trump comes despite the Republican candidate’s repeated skepticism about electric and autonomous vehicles, Tesla’s bread and butter.