Tesla's Stock Soars 21.92% on Record Earnings and Bold Forecasts
1min read Tesla's recent financial results surpassed expectations, leading to a dramatic surge in its stock price. On October 24, following the release of its third-quarter report, Tesla's share price skyrocketed 21.92%, making it the largest single-day increase since 2013. The closing price was $260.48 per share, with the company's market capitalization swelling by approximately $150 billion overnight. This increase in market value is equivalent to the entirety of Contemporary Amperex Technology Co. Limited (CATL), a leading battery manufacturer.
The financial report revealed a significant year-over-year growth, with revenues reaching $251.82 billion, up by 8%. Net profit surged by 17% to $21.67 billion, with a gross margin increase to 19.8%. These figures strongly exceeded market projections. The company's vehicle deliveries also hit a new record, with approximately 463,000 electric vehicles delivered globally in the third quarter, marking a new quarterly high for 2024.
Additionally, CEO Elon Musk provided an optimistic outlook, predicting a 20-30% increase in vehicle sales by 2025, barring any major adverse events. Musk also announced plans to launch more affordable models in early 2025, aiming to reduce electric vehicle costs below $30,000 with incentives, a strategy aligned with Tesla's long-term vision of making electric cars more accessible.
This surge in Tesla's stock price reflects more than just favorable financial results. Prior to this report, the market was concerned about declining global demand for electric vehicles, which had put downward pressure on Tesla's stock for several quarters. The recent results suggest improved operational efficiency and the beneficial impact of carbon credits sales, boosting investor confidence.
While the bullish sentiment among many analysts resulted in increased ratings and price targets for Tesla's stock, some remain cautious. They suggest that the substantial price hike could partly result from short sellers covering their positions following the unexpectedly strong earnings. A significant short interest existed in Tesla's stock, comprising 2.33% of its total share count by the end of September.
Tesla's fortification of its cost control strategies alongside gains from the sale of carbon credits has also bolstered profit margins. However, some skeptics argue that the factors driving the current profitability may not be sustainable, with potential risks including future price cuts if order growth slows down. As such, the outlook for Tesla's stock remains a subject of divided opinion among market analysts.
