Tesla shares jump 22% following Q3 earnings beat, driven by growth outlook

Tesla Inc. (NASDAQ: TSLA) shares surged nearly 22% on Thursday following the company’s mixed third-quarter earnings report, marking its best single-day performance since 2013. Investors appeared to focus on the company’s stronger-than-expected adjusted earnings per share and improved gross margins, alongside CEO Elon Musk’s optimistic outlook for growth in 2024 and beyond.

Tesla reported $25.18 billion in revenue for the quarter, which, while slightly lower than the $25.4 billion expected, exceeded the $23.4 billion from the same period a year ago. Adjusted earnings per share came in at $0.72, outperforming Wall Street’s $0.60 expectation. The company also posted $2.5 billion in adjusted net income and $2.9 billion in free cash flow.

The electric vehicle maker saw its gross margin rise to 19.8%, well above the 16.8% anticipated, thanks in part to improved vehicle production efficiency and the continued ramp-up of the refreshed Model 3. Additionally, Tesla’s Cybertruck production achieved a positive gross margin for the first time.

Investors were buoyed by Musk’s remarks during the earnings call, where he predicted potential vehicle volume growth of 20% to 30% in 2024, though he framed it as a “best guess.” Tesla also announced that its new, more affordable electric vehicle models remain on track for production in the first half of 2025.

Tesla’s Q3 vehicle deliveries totaled 462,890 units, a 6.4% increase from the previous quarter and ahead of the 435,059 vehicles delivered in the same period last year. While Wall Street had expected slightly higher delivery numbers, the results marked the first quarter of growth in 2023.

Despite these positive indicators, Tesla had faced a challenging period earlier in October, with shares down roughly 11% after its flashy “We, Robot” event in Burbank, Calif., where the company revealed its upcoming autonomous Cybercab robotaxi. Investors and analysts had expressed concerns over the lack of detail provided about the Cybercab’s development and Tesla’s forthcoming sub-$30,000 EV, known as the Model 2.

Looking forward, Tesla aims for slight growth in vehicle deliveries in 2024, with Musk noting that the production of Cybercabs could reach 2 million units annually by 2026. Additionally, Tesla’s Energy Generation and Storage business achieved a record 30.5% gross margin in Q3, and the company expects to more than double the division’s performance year over year in 2024.