Tesla's Gross Margin Hits 7-Quarter High, Shares Jump Over 12% After Hours

Almost half a month after the disappointing Robotaxi Day, Tesla surprised the capital market.

Early on October 24th Beijing time, Tesla released its financial results for Q3 2024. The revenue during the period was $25.182 billion, a year-on-year increase of 8%; net profit was $2.167 billion, a year-on-year increase of 17%, far exceeding market expectations.

After the release of the financial report, the company's CEO Musk described the quarterly performance on social media with the word "Progress", and Tesla's stock price rose by more than 12% after the US stock market closed.

Automobile sales revenue is Tesla's largest source of income. This business brought in $20.016 billion in revenue in Q3, a year-on-year increase of 2%, accounting for 79.48% of the company's total revenue.

In Q3, Tesla delivered a total of 462,900 vehicles, a year-on-year increase of 6%, slightly lower than market expectations.

Gross margin is one of the indicators that the market pays most attention to. In Q3, the company recorded a gross margin of 19.8%, an increase of 1.9 percentage points year-on-year, setting a new high for 7 quarters. In addition, the gross margin of the pure electric pickup Cybertruck has also turned positive.

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The improvement in Tesla's profitability this quarter is due to the reduction in the manufacturing cost per vehicle and the increase in gross profit from energy storage and other businesses. The company's CFO Vaibhav Taneja said on the earnings call that reducing car costs will be a trend that the company will focus on.

The company estimates that Tesla will achieve its annual delivery target this year (more than 1.8086 million vehicles). This means that the company needs to deliver at least 514,800 vehicles in Q4.

At the earnings call, the company's CEO Musk also provided sales guidance for next year: in the best-case scenario, sales can grow by 20% to 30% next year.The much-anticipated affordable car model has also received new information. The company stated in its financial report that the affordable car model is expected to begin production in the first half of next year.

On the day the financial report was released, Tesla's stock price fell by 1.98% to $213.65. So far this year, Tesla's stock has accumulated a decline of over 14%, making it the only company among the Magnificent 7 to see a drop in stock price this year.

Before the release of the financial report, Wedbush maintained its "outperform" rating for Tesla in a research report, with a target price of $300. The firm believes that the company's profit margins will reach an inflection point next year.

In a recent research report, Guotai Junan Securities gave Tesla an "accumulate" rating with a target price of $274.4. The report stated that Tesla is the world's largest electric vehicle company, and its various business layouts are all in leading positions in the industry, with significant growth potential in the medium to long term.

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