Tesla stock jumps on Q3 earnings beat

Tesla (TSLA) reported mixed third quarter results after the bell on Wednesday, but the stock jumped in after-hours trading as investors cheered the earnings beat, higher gross margins, and news that Tesla’s cheaper EV is on track for production next year.

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.

Tesla shares were up nearly 8% in after-hours trade.

“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.

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.

The debut and release of a cheaper EV is what many analysts and industry watchers believe will spur the next leg higher of EV sales, as even CEO Elon Musk has said before. During its Q2 report, Tesla and Musk said the company remains on track for the production of new vehicles, likely including a cheaper EV, in the first half of next year.

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.

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“Overall, we found Tesla’s Robotaxi event to be underwhelming and stunningly absent on detail,” wrote Bernstein analyst Toni Sacconaghi the day after the event. “While Musk articulated his vision for an autonomous world, it offered little beyond what he has articulated repeatedly over the last few years.“

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.

This story is developing. Check back for updates.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on X and on Instagram.

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