Tesla’s Shares Surge 21.9% After Strong Q3 Results and Optimistic 2025 Forecast

Tesla’s stock saw its largest single-day increase since 2013 after the electric vehicle giant reported better-than-expected quarterly profits and forecasted “slight growth” in deliveries for 2024, with a significant boost projected for 2025.

The performance reflects a positive turnaround for Tesla, which has faced a challenging few quarters amid concerns over weakening global demand for electric vehicles. The company has also navigated controversy surrounding CEO Elon Musk’s political stances and a legal battle to restore his $56 billion stock option package. Musk projected on Wednesday that vehicle sales could rise by 20% to 30% in 2024 as cost reductions lower car prices, likely stimulating demand. He also pointed to advancements in Tesla’s self-driving technology and new offerings, including the autonomous “Cybercab” introduced earlier this month. Additionally, he noted that decreasing interest rates have lowered monthly financing costs, boosting demand further.

Tesla’s shares rose by 21.9% on Thursday, adding over $150 billion to its market cap—a reassuring development for investors, as shares remain at half their November 2021 peak. Tesla, however, retains its position as the world’s most valuable carmaker.

The company reported an 8% rise in adjusted net income for Q3, reaching $2.5 billion, surpassing analyst expectations of $2.1 billion. Revenue grew by 8% to $25.2 billion, slightly below the $25.4 billion forecast. Profits were bolstered by a 2% increase in vehicle sales revenue—accounting for 80% of Tesla’s income—alongside a 52% rise in revenue from its energy generation and storage division, and a 29% increase in its services business, which includes its supercharger network.

Operating expenses decreased by 6% to $2.3 billion after a workforce reduction of 10%, approximately 14,000 jobs, earlier in the year. Tesla maintained its outlook for “slight growth” in 2024 vehicle deliveries despite global economic challenges and reaffirmed that new vehicles, including more affordable models, are on track for production in the first half of 2025.

Musk clarified that Tesla had no plans to develop an anticipated $25,000 “Model 2.” Instead, he emphasized that the company was focusing on cost reduction for existing models. The Cybercab, expected to cost around $25,000 with government EV incentives, represents part of Musk’s strategic shift toward autonomous driving and robotics, which he envisions as Tesla’s future main revenue sources. This month, Musk revealed a prototype of self-driving “Cybercabs” slated for production by 2027, although analysts and investors were underwhelmed by the lack of technical and financial details shared during the “We, Robot” event in Los Angeles.

Third-quarter results offered a brighter outlook. Tesla announced that its Cybertruck production had reached a positive gross margin for the first time, and the model ranked as the third best-selling EV in the U.S., behind the Model Y and Model 3. Tesla also disclosed that production for its “Semi” electric truck would begin by the end of 2024, with Musk citing “ridiculous demand” for the vehicle.

Earlier in the month, Tesla reported a 6.4% increase in Q3 deliveries, reaching 462,890 vehicles globally, buoyed by strong Chinese sales offsetting weaker demand in Europe, and maintained its lead over China’s BYD. Analysts observed an improvement in Tesla’s gross margin, which increased to 19.8% from 17.9% in the same quarter last year, aided by $739 million in revenue from regulatory credits, Tesla’s second-highest amount after the record $890 million in Q2.

Tesla also updated its progress on artificial intelligence infrastructure at its Texas plant, disclosing that 29,000 Nvidia H100 graphics processing units (GPUs) were installed to support its self-driving AI, known as FSD, with plans to increase this to 50,000 units by the end of October.

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