Tesla's Earnings Surprise Fuels Stock Rally

Tesla (TSLA) shares surged after the close on Wednesday, following the company's announcement of a surprise third-quarter earnings gain. The electric vehicle (EV) giant reported a 9% increase in quarterly profit, with earnings per share (EPS) reaching 72 cents, surpassing analyst expectations of 59 cents. Revenue totaled $25.18 billion, up 8% year-over-year, although it fell short of the $25.47 billion consensus estimate.


Tesla's earnings beat was driven by several factors, including a significant improvement in the cost of goods sold per vehicle, which hit a historic low of $35,100. This contributed to the company's gross margin and earnings beats. Additionally, Tesla reported that its total gross margins reached 19.8%, up 195 basis points compared to the year-earlier quarter, and Tesla Energy gross margins hit a record 30.5%.


The Cybertruck, Tesla's angular steel pickup, played a crucial role in the company's financial performance. Despite quality issues, the Cybertruck became the third-best-selling fully electric vehicle in the U.S., behind only the Model 3 and Model Y. According to estimates from Kelley Blue Book, Tesla sold more than 16,000 Cybertrucks in the U.S. in the third quarter. The Cybertruck achieved a positive gross margin for the first time, contributing to Tesla's overall earnings growth.

Tesla's Full Self-Driving (FSD) system, now available for use in the Cybertruck and featuring a new "Actually Smart Summon" feature, contributed $326 million in revenue in the quarter. This premium driver-assistance system, sold as an up-front option or for a monthly fee, has become an essential revenue stream for Tesla.


Tesla's production and delivery numbers, while growing 6% year-over-year, fell short of analyst expectations. The company delivered 462,890 vehicles in the third quarter, with production totaling 469,796 electric vehicles. Despite the slight growth, deliveries followed two straight quarters of year-over-year declines. Tesla has been offering various discounts and incentives to spur sales.

Looking ahead, Tesla expects to achieve slight growth in vehicle deliveries in 2024, despite ongoing macroeconomic conditions. The company also reiterated its goal of launching more affordable models in the first half of 2025.

As Tesla's earnings call approaches, investors and analysts will be eager to hear more about the company's plans for full self-driving, the still-unseen "affordable" vehicle, and any commentary on the long-awaited Model Y refresh. Tesla stock jumped more than 7% in late trade after closing down 2% during market trade on Wednesday, with shares potentially retaking the 50-day line on Thursday.

In conclusion, Tesla's surprise earnings gain, driven by improved gross margins, Cybertruck sales, and FSD revenue, fueled a stock rally after the close on Wednesday. As the company looks to the future, investors will be watching for updates on its plans for full self-driving, affordable models, and the Model Y refresh.