/Tesla%20Inc%20tesla%20by-%20Iv-olga%20via%20Shutterstock.jpg)
Tesla (TSLA) stock rose almost 22% on Thursday, and had its best day in years, after the company's Q3 earnings report - and importantly, the guidance - left markets in awe. The Elon Musk-run company proved the bears wrong yet again, and the Q3 confessional had something for everybody. It was a “he came, he saw, and he conquered” kind of commentary from Musk during the earnings call.
Interactive Brokers chief strategist Steve Sosnick perhaps best summed up the report when said, “Basically, this is a hard story to poke holes in, and you really can't, which is why the stock is up 20%.”
In this article, we’ll look at some key takeaways from Tesla’s Q3 report, and analyze whether it's too late to buy the stock.
Key Takeaways from Tesla’s Q3 Report
Tesla provided upbeat commentary for both the short term as well as the long term during the Q3 earnings call. Here are some of the key takeaways from the report:
Delivery growth: Tesla expects its 2024 deliveries to rise on a YoY basis, which would suggest a significant increase in Q4 deliveries, as the company’s deliveries in the first 9 months of the year are lower than they were in the comparable period of 2023. More importantly, Musk said that Tesla’s deliveries could grow by as much as 30% next year, which is twice what the Street was expecting.
Other Businesses: Revenues of Tesla’s Energy business rose over 50% YoY in Q3, and the segment now has a nearly 10% contribution to the company’s consolidated revenues. Tesla earned $739 million selling regulatory credits during Q3, which is the second highest ever. These revenues almost entirely flow to Tesla’s gross profits, and might continue to remain strong as other automakers have scaled back their electric vehicle (EV) plans, and will need to buy these credits from companies like Tesla.
New Models: Musk reiterated that Tesla is on track to deliver its low-cost model next year, with Cybercab mass production expected in 2026. He added that the company is aiming to sell at least 2 million Cybercabs annually. The company also expects production of its Semi truck to begin in 2026.
FSD: While Musk’s previous timelines for Tesla’s full self-driving (FSD) achieving full autonomy didn’t play out as expected, he is still optimistic about achieving that feat. During the Q3 earnings call, the billionaire said, “Our internal estimate is Q2 of next year to be safer than human and then to continue with rapid improvements thereafter.” His new timeline for full autonomy is “next year.” Musk added that “there's no need to wait for robotaxi or Cybercab to experience full autonomy.”
Ride-hailing: Musk said that Tesla is looking to roll out ride-hailing in Texas and California in 2025 - a piece of commentary that sent Uber (UBER) stock to a negative close.
Tesla Earnings Had Something for Both Short-Term and Long-Term Investors
Noted tech analyst Gene Munster said that Tesla’s earnings had something for both the short-term and long-term investors. He sees the strong Q3 profitability and guidance on Q4 and 2025 deliveries as positives in the short term.
According to Munster, “The long-term investors got the golden carrot.” He sees Musk’s comments on Cybercab deliveries, which the Tesla CEO believes could even rise to 4 million units annually, as a key takeaway for long-term investors.
Unanswered Questions During TSLA's Q3 Earnings Call
There were only a handful of questions from sell-side analysts during Tesla’s earnings call, and even these were from those who are in the bullish camp. Munster believes that questions about Musk’s political activities – especially if Trump wins in the upcoming elections – were unanswered during the call.
Then, there is the question about Tesla actually achieving all of the rosy forecasts that it has provided, as during the earnings call Musk used “guess” a lot more than I would be comfortable with. As for FSD, it would be prudent to take the possibility of it achieving full autonomy in 2025 with not a pinch but perhaps a spoonful of salt, as Musk has made such observations multiple times – most recently in 2023, when he predicted Tesla achieving the feat by the “end of the year.”
Is It Too Late to Buy Tesla Stock After This Week’s Spike?
I believe that if you are a short-term investor, it's now a bit late to buy Tesla stock, as it now seems to almost fully price in the announcements that Musk made for the next couple of years. The company has faced issues ramping up models in the past, so it remains to be seen how well the upcoming low-cost model and Cybercab will perform. Also, Tesla stock could be quite volatile around election results, given how closely Musk has associated himself with Donald Trump.
However, if you are a long-term investor, there is still a lot more to come in the Tesla story, as the company positions itself more of an artificial intelligence (AI) play with offerings like Optimus humanoid, Dojo supercomputer, and FSD.
While EVs continue to be the bread and butter for Tesla for now, if Optimus can make it as big as Musk believes, TSLA could be a much different company five years from now. Tesla has always been a story for the believers, and to his credit, Musk has not disappointed those who have trusted his vision. If Tesla can come anywhere close to the kind of numbers Musk is touting for Optimus, it might just have a shot at becoming the world's biggest company in the long term.
On the date of publication, Mohit Oberoi had a position in: TSLA . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
