Tesla Crushes Wall Street Expectations in Q3 Earnings, up 12%

Tesla Crushes Wall Street Expectations in Q3 Earnings, up 12%
Tesla exceeded Wall Street’s profit estimates in its third-quarter earnings report, leading to a 12% increase in stock value during after-hours trading. Elon Musk anticipates Tesla will receive regulatory approval for autonomous rides in Texas and California next year.
Financial Performance
Tesla reported earnings per share of $0.62, surpassing analysts’ expectations of $0.51. Revenue reached $25.18 billion for the quarter, although slightly below forecasts. Tesla’s gross margin climbed to 19.8%, closely watched by investors.
Cybertruck and New Vehicles
The Cybertruck reached profitability, and the company confirmed that plans for new vehicles, including more affordable models, remain on track for production in the first half of 2025.
Autonomous Vehicles
Musk expects Tesla to gain regulatory approval for fully autonomous rides in Texas and California next year, calling for a pathway to national approval for fully driverless cars. He referenced Trump’s proposed government-efficiency commission, expressing willingness to assist in its establishment. Tesla noted an increase in FSD beta software adoption after the Cybercab event.
Lower-Cost Vehicles
Musk stated that people should not expect Tesla to produce a Cybercab model with a steering wheel and pedals, emphasizing that “a regular $25K model is pointless” and “silly.” The company remains committed to releasing more affordable models next year, with the goal of reducing vehicle costs and expanding the adoption of sustainable energy and transportation.
Retail Investor Questions
Musk and Tesla executives addressed questions submitted by retail investors during the earnings call, primarily focusing on topics such as FSD, Optimus, and the Cybertruck.
Tesla Energy and Optimus
Musk highlighted the “gigantic” opportunity in the energy business, particularly for the enterprise-focused segment. Megapack factory production reached 200 Megapacks per week in the third quarter. Musk also extolled the dexterity of Optimus, Tesla’s humanoid robot.
Ride-Hailing App
Musk predicted that Tesla’s ride-hailing app will be available to the public in California and Texas next year, citing a long regulatory approval process. He expects the app to launch in both states and possibly expand to others in the future.
Stock Performance
Tesla’s stock price jumped 12% in after-hours trading after the earnings release. If the stock opens above that mark when the market opens tomorrow morning, it would erase the losses since the Cybercab event.
FSD Improvements
Musk reported significant improvement in FSD use, especially after the Cybercab event. He expects roughly a five or six-fold improvement in miles between interventions in the next version of FSD.
Cybercab Update
Musk projected that Cybercab will reach volume production in 2026, aiming for at least 2 million units per year in multiple factories.
Growth Projections
Musk suggested Tesla could achieve 20-30% growth in vehicle sales next year, emphasizing that these are his estimates.
Outlook
In the outlook section of its earnings presentation, Tesla projects “slight growth” in vehicle deliveries for 2024 despite ongoing macroeconomic conditions. The company remains between two major growth waves and predicts positive growth in vehicle deliveries this year.
New Vehicle Plans
Tesla confirmed that plans for new vehicles, including “more affordable” models, are on track for production in the first half of 2025. These vehicles will utilize aspects of both the next-generation platform and current platforms, enabling production on the same manufacturing lines as the current vehicle lineup.
Analyst Views
Wedbush:
Analyst Dan Ives maintains a bullish view on Tesla stock, expecting a return to growth in its Q3 earnings call and forward guidance. Ives predicted Tesla could deliver 1.8 million vehicles in 2024 and over 2 million in 2025.
Wells Fargo:
Analyst Colin Langan believes Tesla will resort to pricing incentives to boost vehicle deliveries after reporting disappointing third-quarter deliveries. He predicted Tesla’s automotive gross margin would decline in the third quarter.
Barclays:
Analyst Dan Levy expects Tesla to beat earnings estimates and believes that the earnings report will serve as a catalyst for the stock. Levy suggests that commentary on plans for a lower-cost vehicle could impact the stock’s performance.
Bloomberg Intelligence:
Director of credit research Joel Levington expressed concerns about Tesla’s luxury brand identity amid price cuts and declining trade-in values for Tesla vehicles. Levington argued that Tesla needs to release a lower-cost vehicle to remain competitive.