Tesla’s third-quarter earnings report, released on Wednesday, exceeded market expectations, lifting the company’s stock after a period of stagnation following the recent unveiling of its Robotaxi concept. Despite the initial disappointment surrounding the Robotaxi announcement, strong profit margins and a positive sales outlook for 2024 have reinvigorated investor confidence in Tesla’s core electric vehicle operations.
Analysts emphasize that Tesla must remain focused on its foundational business—electric vehicle sales. Following the earnings report, CEO Elon Musk indicated a projected year-over-year growth in vehicle sales, estimating an increase of 20% to 30% for the upcoming year. Known for his optimistic projections, Musk’s statements reflect a commitment to bolstering the company’s core offerings.
In a memo after the earnings call, analysts from Piper Sandler remarked on the importance of Tesla’s self-driving technology, artificial intelligence, and robotics for the company’s long-term strategy. However, they noted that robust performance in the base automotive business significantly enhances investor sentiment.
The initial reaction to Tesla’s Robotaxi launch was tepid, with a subsequent 10% drop in stock value despite the introduction of a surprise Robovan and assurances of fully autonomous driving capabilities in California and Texas by next year. Following this, Barclays analyst Dan Levy observed that the emphasis is now shifting back to Tesla’s foundational business metrics.
Tesla reported impressive gross margins of 19.8%, surpassing expectations of 16.8%, and achieved an adjusted earnings per share of $0.72, well above the anticipated $0.60. Following the report, the stock price surged by over 10% in after-hours trading, although it remains approximately 15% lower year-to-date.
Gene Munster, managing partner at Deepwater Asset Management, commented that this quarter’s earnings signal a positive turnaround, marking a notable shift after six consecutive quarters of mixed results. He pointed out that while Musk discusses futuristic projects such as autonomy and robotaxi fleets, analysts are primarily concerned with immediate vehicle sales and profitability.
In addition to the strong earnings report, Tesla highlighted the profitability of its Cybertruck, launched less than a year ago, and reassured stakeholders that production of more affordable vehicle models is on schedule for the first half of 2025. Musk also emphasized advancements in Tesla’s energy products and the development of fully autonomous self-driving vehicles.
Mark Narayan, an analyst with RBC Capital Markets, suggested that the positive quarterly results should mitigate the adverse impacts from the Robotaxi event. He expressed hope that a strong focus on automotive fundamentals could pave the way for renewed interest in Tesla’s long-term aspirations in autonomy and robotaxi development.
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