CANNES, FRANCE – JUNE 19: Elon Musk attends the session “Exploring the New Frontiers of Innovation: Mark Read in Conversation with Elon Musk” at Cannes Lions International Festival of Creativity 2024 – Day Three on June 19, 2024 in Cannes, France. (Photo by Marc Piasecki/Getty Images)
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Tesla shares rose roughly 19% Thursday morning, putting them on pace for the stock’s best day in more than three years as the company performed better than expected. earnings report.
The company reported revenue of $25.18 billion late Wednesday, which was below analysts’ expectations of $25.37 billion but up 8% from a year earlier. Tesla reported earnings of 72 cents per share, beating the average analyst estimate of 58 cents.
“We expect this surprising earnings to trigger a strong positive reaction in Tesla shares on Thursday, given how conditioned investors are to the company’s earnings misses,” JPMorgan analysts wrote in a note.
Tesla’s profit margins in the third quarter were boosted by $739 million in revenue due to the auto industry regulatory credit, which JPMorgan analysts described as “potentially unsustainable” future cash flow performance.
They are car makers necessary to obtain a certain the number of regulatory credits each year, and if they cannot meet the goal, they can buy credits from other companies. Tesla has excess credit because it only makes electric vehicles.
Tesla CEO Elon Musk He said in an earnings call on Wednesday that his “best guess” is that next year “vehicle growth” will reach 20% to 30%, citing “lower-cost vehicles” and “the advent of autonomy.” Analysts polled by FactSet expected growth of around 15% by 2025.
Analysts at Morgan Stanley, who recommend buying the stock, called Musk’s 2025 vehicle delivery growth forecast a “maybe.” They set their estimate at 14%.
“It clearly depends on the company’s ability to improve affordability through the introduction of more affordable (next-generation) models, financing offers and improved features,” Morgan Stanley analysts wrote in a note Thursday.
With Tesla’s rally on Thursday, the stock erased losses for the year and is now up nearly 2%, though it still trails the Nasdaq’s 22% gain.
— CNBC’s Lora Kolodny contributed to this report.
