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Apu Gomes/Getty Images; Chelsea Jia Feng
- Tesla’s Q3 earnings surpassed forecasts, revitalizing stock prices following a lackluster Robotaxi announcement.
- Robust profit margins and anticipated sales growth for 2024 have positively influenced investor sentiment.
- Analysts are focusing on the fundamental aspects of Tesla’s automotive sector.
Tesla released its third-quarter earnings report on Wednesday, which outperformed market expectations and helped lift Elon Musk’s company from a temporary stock slump that followed the recent Robotaxi reveal.
Market analysts interpreted these results as a reminder for Tesla to prioritize its foundational business: electric vehicle sales. Prior to the report, they were keenly observing performance metrics from this core segment.
The company announced a profit for the third quarter and projected modest year-over-year growth in vehicle sales for 2024. During the subsequent earnings call, Musk expressed optimism about an expected increase in vehicle sales ranging from 20% to 30% next year—a hallmark of his forward-looking approach.
Piper Sandler analysts noted in their post-earnings memo that while self-driving technology, artificial intelligence, and robotics remain central to Tesla’s long-term vision, strong performance in its primary business significantly boosts investor confidence.
The initial unveiling of Tesla’s Robotaxi did not resonate well with investors despite an unexpected announcement regarding Robovans and commitments towards unsupervised fully autonomous driving slated for California and Texas next year. Following this event, shares dropped by approximately 10%.
“With Robotaxi Day behind us,” Barclays analyst Dan Levy remarked last week, “the focus now shifts back to fundamental aspects of Tesla.”
The company reported gross margins that exceeded expectations—19.8%, compared to an anticipated 16.8%. Additionally, adjusted earnings per share reached $0.72—significantly higher than the $0.60 forecasted by analysts.
This positive news led to a more than 10% surge in stock price during after-hours trading; however, overall shares have declined roughly 15% throughout this year.
Gene Munster from Deepwater Asset Management commented post-call that this quarter marked “a rare instance over the past six quarters where there was good news across all fronts.” He emphasized how much attention analysts pay to short-term results within Tesla’s automotive division when assessing stock movements.
“While Elon discusses autonomy initiatives like Cybercabs and robotaxi fleets,” he added, “analysts are primarily concerned with vehicles and profitability.”
Tesla also indicated that its Cybertruck became profitable less than one year after launch. Furthermore, production plans for “more affordable models” remain on schedule for early 2025 release dates according to their latest earnings report.
Musk highlighted other facets of Tesla’s operations as well—including energy products alongside fully autonomous driving capabilities—during his remarks following the financial disclosures.
Mark Narayan, an analyst at RBC Capital Markets stated after reviewing quarterly outcomes that these results should effectively mitigate losses incurred post-Robotaxi event.
“If analysts find satisfaction with car business fundamentals,” he suggested,“they may shift focus back toward long-term goals such as autonomy (FSD/Robotaxi) or Optimus.”
