Tesla reported mixed third quarter results after the bell on Wednesday, but the stock jumped 17.1% in morning trading Thursday as investors cheered the earnings beat, higher gross margins, and news that Tesla's cheaper EV is on track for production next year. CEO Elon Musk also added on the earnings call that Tesla's volume growth could be 20-30% next year.
Tesla-linked ETFs also soared in morning trading. TSLT, TSLL, and TSLR rose 34%; TSL rose 21%.
For the quarter, Tesla reported revenue of $25.18 billion vs. $25.4 billion per Bloomberg consensus, higher than the $25.05 billion it reported in Q2 and also topping the $23.40 billion Tesla reported a year ago. Tesla posted adjusted EPS of $0.72 vs. $0.60 expected, on adjusted net income of $2.5 billion and free cash flow of $2.9 billion.
The closely watched gross margin figure came in at 19.8%, much higher than the 16.8% expected.
"We delivered strong results in Q3 with growth in vehicle deliveries both sequentially and year-on-year, resulting in record third-quarter volumes," the company said in its earnings deck. "Preparations remain underway for our offering of new vehicles — including more affordable models — which we will begin launching in the first half of 2025."
Earlier this month, Tesla announced third quarter deliveries that slightly missed expectations, sending the stock lower.
Tesla said it delivered 462,890 vehicles in Q3, up 6.4% quarter over quarter, to mark the first quarter of delivery growth this year. The numbers also came in ahead of the 435,059 EVs the company delivered in the year-ago period. But Wall Street had expected Tesla to deliver closer to 463,897, according to Bloomberg.
"Refreshed Model 3 ramp continued successfully in Q3 with higher total production and lower cost of goods sold quarter-over-quarter. Cybertruck production increased sequentially and achieved a positive gross margin for the first time," Tesla said in its report.
Tesla said it expects vehicle deliveries to achieve "slight growth" in 2024. CEO Elon Musk added during the conference call that 20-30% growth next year is possible, though he couched it as a "best guess."
Ahead of Tesla's Q3 disclosure, shares were down approximately 11% since Tesla revealed its robotaxi, dubbed the Cybercab, at its showy “We, Robot” event from the Warner Bros. studio lot in Burbank, Calif., on Oct. 10.
Investors and analysts were left wanting more details from Tesla’s “We, Robot” event on the Cybercab itself and detailed testing plans, along with questions about the development of Tesla’s sub-$30,000 EV, dubbed the Model 2.
On the conference call, Musk said the Cybercab would reach volume production in 2026, not just start production, and the company aims for 2 million Tesla Cybercabs per year.
Tesla and Musk added the company remains on track for the production of new vehicles, likely including a cheaper EV, in the first half of next year.
Musk also said that the company is testing robotaxi summoning and drives in the San Francisco area for employees, with safety drivers at the wheel.
Tesla reported that its Energy Generation and Storage business hit a record gross margin of 30.5% in Q3, and that it expects the business to more than double year over year in 2024.