Tesla (TSLA) had a strong day on Wall Street Thursday, with shares rising over 20% to $258, marking their biggest surge since 2013. The rally, which pushed the stock into positive territory for 2024, came on the heels of Tesla’s better-than-expected third-quarter results.
Despite revenue slightly missing analysts’ projections at $25.18 billion, Tesla’s adjusted earnings per share of 72 cents handily surpassed the forecasted 60 cents, triggering a wave of optimistic market sentiment. JPMorgan (JPM) analysts highlighted the significance of this earnings beat, noting its particular impact given investors’ recent experience with earnings disappointments from the company.
Tesla’s profit margins were partly driven by $739 million in environmental regulatory credits, though JPMorgan cautioned about the sustainability of this revenue stream. These credits, which Tesla accumulates through its exclusive focus on electric vehicles, can be sold to other automakers struggling to meet environmental targets.
Adding to the positive narrative, Tesla’s Full Self-Driving Supervised system contributed significantly, generating $326 million in quarterly revenue. CFO Vaibhav Taneja attributed this success to the system’s expansion to Cybertruck and the introduction of the “Actually Smart Summon” feature.
CEO Elon Musk’s optimistic projection of 20-30% vehicle growth for 2025 surpassed analyst expectations, which had centered around 15%. However, Morgan Stanley (MS) analysts maintained a more conservative 14% growth estimate, emphasizing that success would hinge on Tesla’s ability to improve affordability through cheaper models and enhanced financing options.
Tesla’s stock surge not only marked Tesla’s second-strongest daily performance in its history but also erased the company’s year-to-date losses, pushing it to a 3.7% gain for 2024. While this represents a remarkable turnaround, Tesla still lags behind the Nasdaq’s (^IXIC) impressive 22.5% advance this year, highlighting the competitive challenges facing the electric vehicle pioneer in an increasingly crowded market.
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