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Tesla (TSLA) spiked more than 12% in after hours trading today as Wall Street reacted to the electric vehicle (EV) giant’s highly anticipated third-quarter earnings report. Despite a slight miss on revenue estimates, the company's adjusted earnings per share exceeded expectations, driven by improved profit margins and reduced production costs.
Operating margin reached 10.8% of sales in Q3, up from 7.6% last year. Adjusted EPS arrived at $0.72, beating estimates by $0.12 per share, while revenue rose 7.8% year over year to $25.81 billion. Free cash flow of $2.7 billion boosted Tesla’s cash position to $33.6 billion at the end of the quarter.
Notably, the Cybertruck achieved a positive gross margin for the first time, and Tesla's cost of goods sold per vehicle reached a historic low, which contributed to margin improvements. The company is also optimistic about slight growth in vehicle deliveries for 2024, despite missing delivery estimates for the third quarter.
Tesla's focus on Full Self-Driving (FSD) technology appears to be a significant driver of demand, potentially offsetting concerns about the aging model lineup. The company also says it’s on track to begin production of more affordable EV models by 2025, which could further enhance its competitive position in the market.
TSLA is rated “Hold” overall on Wall Street. While Tesla's growth potential and innovative edge are appealing to the stock’s bulls, the EV giant’s premium valuation remains a cause for concern among many skeptics. Ultimately, whether Tesla is a good investment depends on the investor's risk tolerance and belief in the company's future growth prospects.
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On the date of publication, Edited by Elizabeth Volk did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
