TLDR:
- Tesla stock surged nearly 22% – biggest single-day gain in over a decade
- Company reported improved margins and lowest-ever production costs of $35,100 per vehicle
- Musk forecasts 20-30% sales growth in 2025
- Tesla plans to launch affordable vehicle in early 2025
- Company added approximately $150 billion in market value in single trading session
Tesla stock experienced its largest single-day gain in over a decade on Thursday, surging nearly 22% after the electric vehicle maker reported better-than-expected third-quarter earnings and reduced production costs. The rally added approximately $150 billion to Tesla’s market value.
The company’s shares closed at $262.2, marking their most substantial increase since May 2013. Trading volume reached roughly 200 million shares as investors responded positively to CEO Elon Musk’s forecast of 20-30% sales growth in 2025.
Tesla reported its first earnings growth in seven quarters, with improved operating profit margins and automotive gross profit margins. The company achieved its lowest-ever cost per vehicle produced, at approximately $35,100, demonstrating progress in production efficiency.
The earnings report revealed $326 million in revenue from Tesla’s Full Self Driving (FSD) software, used in the Cybertruck and other autonomous features. This revenue stream contributed to the company’s margin expansion during the quarter.
In response to the results, several Wall Street firms adjusted their outlook on Tesla. Cannacord Genuity raised its price target to $278 from $254, while maintaining a buy rating. J.P. Morgan, though keeping an underweight rating, increased its price target to $135 from $130.
Tesla has delivered more than 1.29 million electric vehicles in 2024 through September, including 462,890 units in the third quarter. The company projects “slight growth” in deliveries for the full year, which would require fourth-quarter sales exceeding 516,000 units to surpass its 2023 record of 1.8 million vehicles.
During the earnings call, Musk outlined plans to begin scaling production of Cybercab robotaxis in 2026, with potential annual production reaching between 2 and 4 million units. The company intends to launch rideshare services in California and Texas next year.
Tesla is currently testing its rideshare network with employees at its Bay Area facilities, using current models with drivers. Palo Alto is in discussions to incorporate Tesla’s robotaxi in its rideshare program, though production isn’t scheduled to begin until 2026.
The stock’s sharp rally may be partially attributed to short covering, with short interest on Tesla stock at 2.33% at the end of September, according to LSEG data. The surge erased recent losses that followed Tesla’s robotaxi product demonstration earlier this month.
Tesla’s current price-to-earnings ratio stands at 72.75 times its 12-month forward earnings estimates, compared to Ford’s 5.94 and Microsoft’s 30.79, reflecting continued high growth expectations from investors.
Musk announced plans to launch a more affordable vehicle model in early 2025, addressing concerns about Tesla’s product lineup expansion. The company expects this new model to help drive the projected 20-30% sales growth next year.
At least seven brokerages raised their price targets on Tesla stock following the earnings report, with a median price target of $221, according to LSEG data.
The rally represents a reversal from recent market concerns about Tesla’s margins and Musk’s focus on new projects like robotaxis and artificial intelligence initiatives.
Tesla’s cost of revenue improvements played a key role in the positive market reaction, with material and labor costs reaching their lowest levels to date.
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