Tesla Jumps More Than 17% as Wall Street Cheers EV Giant's Q3 Success and Guidance, the Bull Not Over

Tesla shares surged more than 17% as EV giant delivered much better-than-expected bottom line, CEO Elon Musk's comments on at least 20% vehicle growth next year. Wall Street analysts largely buy into the positive outlook, believing that the darkest headwinds are over.

Tesla reported an 8% increase in revenue for the quarter, reaching $25.18 billion, slightly below the expected $25.37 billion. However, much stronger earnings offset the weaker revenue. Non-GAAP earnings per share (EPS) were 72 cents, up 9% year-over-year, smashing the estimated 85 cents. Additionally, the Cybertruck is now profitable and is considered the best fully electric vehicle in the U.S. Musk stated that overall vehicle growth next year will be between 20% and 30%, driven by lower cost vehicles and the advent of autonomy, exceeding the estimated 15%.

Bank of America cheered the results and raised its price target to $265 from $255, implying a 24% upside from Wednesday's close.

Tesla is well positioned for a second growth wave. Management provided plenty of positive commentary during the earnings call, noted Analyst John Murphy. Tesla commented that it expects 20-30% unit volume growth in 2025, excluding any exogenous events, start of production of the Cybercab, launch of a public ride-hailing app (in Texas and possibly California), deliveries of batteries for the energy storage business from the Shanghai factory, improved capabilities on FSD, and the start of production for the Semitruck (scale in 2026).

Morgan Stanley reiterated its overweight rating on Tesla, with a target price of $310 per share, or a 45% upside.

One of the strongest Tesla prints in a while could mark a 'bottom' in auto earnings expectations (and sentiment), said Analyst Adam Jonas. More specific comments about 'slight' FY24 delivery growth and next-gen/lower-cost new product introductions in the first half of 2025 help to address investor concerns around top-line growth.

Goldman Sachs Analyst Mark Delaney maintained a neutral rating with a $250 per share price target, implying roughly a 17% upside.

We believe the report is an incremental positive, with stronger margins than we had expected, Delaney said. Key debates will include whether Tesla can meet its FSD [full self-driving] performance and vehicle delivery growth targets for 2025, and also the sustainability of margins.

Barclays also regarded Tesla's earnings as positive but noted that questions remain around Tesla's AI and FSD. Analyst Dan Levy reiterated a neutral rating on Tesla with a $220 price target, or about a 3% upside.

Tesla posted a solid Q3 beat, reflecting upside on margin. While we believe the Q3 print doesn't change the underlying debates around AI/AV strategy or the question of 2025 volume/potential for 'Model 2.5,' it should be deemed a positive as it reflects positive fundamentals for now, with estimates rightsized and likely past the worst on margins, Levy said.

Wells Fargo remained the most critical of Tesla, giving a $125 per share price target, citing high valuations.

Trading at 95x 2025 Street EPS, robotaxi is clearly driving TSLA market premium. After attending We, Robot Day, we still believe these promises won't be delivered on until post-2030, said Analyst Langan. The lack of specifics makes us cautious and will require a long and unknown regulatory approval process. Furthermore, reports indicate the robots were tele-operated.