Shares of Tesla (NASDAQ: TSLA) surged this week on the heels of the company’s robust third-quarter earnings report, coupled with a bullish production outlook for 2025.
Image source: Tesla.
Tesla’s Impressive Rebound
Despite rising Treasury yields – a headwind acknowledged by CEO Elon Musk – Tesla dazzled investors with its third-quarter financials.
Although automotive revenue saw a modest 2% uptick to $20.2 billion, bolstered by stronger energy generation and services revenue, the overall revenue climbed 8% to $25.18 billion, slightly missing the $25.37 billion consensus.
Where the company truly excelled was in its bottom line performance. Posting a notable expansion in gross margin from 17.9% to 19.8% and a striking 54% surge in operating income to $2.7 billion, Tesla exhibited renewed vigor. While adjusted earnings per share saw a modest rise from $0.66 to $0.72, surpassing estimates at $0.58.
With stabilizing vehicle prices, cost benefits from layoffs in the past quarter, and achieving its lowest cost of goods sold per vehicle to date at $35,100, Tesla’s profitability rebounded. Additionally, the quarterly gross profit recorded by the Cybertruck marked a significant milestone.
Tesla’s Anticipated Growth
While anticipating flat vehicle production for the current year, Musk’s revelation of a projected 20% to 30% growth in 2025 resonated positively with investors. He also hinted at the Cybercab commencing production next year, set to hit the roads in Texas and potentially California.
The pivotal role of this vehicle in unlocking the next phase of growth for Tesla’s stock is evident. Currently, investors are rightfully elated by the return to profit growth and the promise of production enhancements next year.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.