Tesla’s stock experienced a significant surge of 20% following the company’s recent earnings report, marking its best performance since 2013. The stock rally was primarily driven by better-than-expected revenue and earnings per share reported by Tesla. Despite falling slightly short of analysts’ revenue estimates, the company’s revenue increased by 8% compared to the previous year. This positive earnings beat came as a surprise to many investors who were accustomed to Tesla often missing earnings expectations.
A notable factor contributing to Tesla’s profit margins in the third quarter was the $739 million revenue generated from environmental regulatory credits. While this provided a significant boost to earnings, analysts have raised concerns about the sustainability of relying on such credits as a driver of earnings and cash flow. Tesla’s ability to meet regulatory credit requirements due to its focus on electric vehicles has given the company an edge in this area.
Another key contributor to Tesla’s earnings was the Full Self-Driving Supervised (FSD) system, which contributed $326 million in revenue during the quarter. The availability of FSD in the Cybertruck, along with new features like “Actually Smart Summon,” played a significant role in driving revenue growth for the company. CEO Elon Musk expressed optimism about the future growth of Tesla, projecting a 20-30% increase in vehicle deliveries for 2025. While analysts have provided varying estimates, with some setting it at 14%, Musk’s ambitious growth forecast highlights the company’s focus on innovation and affordability.
The recent surge in Tesla’s stock price was the second steepest on record and the most significant since 2013. This rally not only erased Tesla’s losses for the year but also positioned the stock with a 3% gain in 2024, though it still lags behind the broader market index like the Nasdaq. The market’s positive reaction to Tesla’s earnings report and growth forecast reflects investor confidence in the company’s future prospects and its position in the electric vehicle market. As Tesla continues to innovate and expand its product offerings, the company remains a key player in the automotive industry’s transition towards sustainability and autonomy.
