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Tesla's Earnings Surprise Lifts Stock Amid Model 2 Hype and Margin Gains

Word on the StreetThursday, Oct 24, 2024 3:00 pm ET

1min read

Tesla's latest quarterly earnings report has stirred significant reactions in the market, showcasing both triumphs and challenges. The company's third-quarter revenue reached $25.18 billion, reflecting a 27% year-over-year growth, slightly trailing market expectations. Despite this, Tesla's stock rose in after-hours trading, buoyed by unexpected earnings figures.

CEO Elon Musk revealed during the earnings call that Tesla plans to begin delivering a new, low-cost model known as "Model 2" at the start of next year. This new addition, alongside adjustments to existing models like the Model Y, leads Musk to forecast a potential 20%-30% delivery increase in the upcoming year.

As investors digested the earnings, Tesla's stock exhibited an intriguing trajectory. The company's stock has dipped approximately 10% since July 23, paralleled by a 7% decline following the October 10 Robotaxi Day event. This volatility underscores the complex reception of Tesla's financial health and strategic direction.

Within this context, Tesla's operating profit margin in the third quarter improved to 7.6%, up from 6.3% in the previous quarter, driven by reduced production costs and efficient expenditure management. These results align with Tesla's goal of reaching an 8% operating profit margin for the same period next year.

The demand for electric vehicles remains a pivotal topic, with particular emphasis on the promising Chinese market and stabilizing U.S. demand. Analysts anticipate Tesla's vehicle deliveries could hit a record 490,000 units in the fourth quarter, potentially totaling 1.8 million vehicles for the year, mirroring 2023's figures.

Tesla also expressed optimism for further advances in artificial intelligence, enhancing its competitive edge through improved autonomous driving capabilities. The financial community remains divided, with differing opinions on the sustainability of these advancements and Tesla’s continued growth trajectory in the face of global challenges.

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