Tesla shares saw a 12 per cent jump after the company reported its third-quarter earnings on Wednesday. The electric-car manufacturer was able to bounce back from a tough second quarter, beating Wall Street expectations for earnings per share. The company reported an earnings-per-share of $0.72, surpassing the projection of investors that was $0.60 as detailed in a report by The Guardian.
The Guardian report further stated that, at the end of the second quarter, Tesla’s chief executive, Elon Musk, said the nearly 50 per cent drop in profits was temporary and due to challenges competing with cheaper or price-slashed electric vehicles by rival companies such as BYD. “We don’t see this as a long-term issue,” Musk said in July, “but really fairly short term.”
Tesla delivered slightly under-expected revenue, however. The company reported $25.18 billion in revenue at the end of the third quarter, just missing Wall Street revenue projections of $25.43 billion.
Tesla press release post-earnings
“Despite sustained macroeconomic headwinds and others pulling back on EV investments, we remain focused on expanding our vehicle and energy product lineup, reducing costs and making critical investments in AI projects and production capacity,” the company said in a press release.
The release further stated that, “We believe these efforts will allow us to capitalise on the ongoing transition in the transportation and energy sectors.”
Further, on the earnings call on October 23, Musk said that Tesla has had a record third quarter and believes Tesla will become the most profitable company in the world if they execute on their plans.
“Tesla is focused on the future of energy, transport, robotics and AI and this is a time where others are focused on just managing on near terms,” Musk said. “We think what we’re doing is the right approach and if we execute on our objectives, and I think we will, my prediction is Tesla will become the most valuable company in the world, probably by a long shot.”
He also stated that he currently doesn’t know of any electric vehicle manufacturer that is profitable.
Tesla delivered 462,890 vehicles at the end of the third quarter, up from 443,956 in the second quarter. Investors and market participants will be looking to hear more about whether the company is on track to match its 2023 vehicle deliveries of 1.8 million units.
The company said that it expected slight growth in vehicle deliveries by the end of the year. Dan Ives, of financial services firm Wedbush Securities according to the Guardian report, remains confident. Meeting that goal will be “a solid feat given the extensive white-knuckle moments seen throughout the first half of the year”, he said in a note to investors.
Market participants and investors will also be looking for more information about the company’s robotaxis following a disappointing launch event. After unveiling the company’s much-hyped robotaxi earlier this month with scant details, Tesla shares dropped by just under 9 per cent and wiped more than $60bn from the company’s value.
Demand for electric vehicles continues to rise
It is important to note that overall demand for electric vehicles (EV) continues to increase, however. US EV market share hit an all-time high at 8.3 per cent, up from 7.5 per cent in the same quarter of 2023, according to Edmunds.
Musk is facing legal scrutiny elsewhere as well the report detailed further. The European Union (EU) is considering fining X based on total sales by SpaceX, Neuralink, xAI and the Boring Company. The bloc has alleged that the social media company failed to address illegal content and disinformation on its platform. Fines can be as much as 6 per cent of the yearly revenue of a company. Tesla will likely be exempt from that fine, however, as it is a public company and not wholly owned by Musk. Market participants and investors will follow these important events and take informed investment decisions based on the same.