Shares of Tesla (TSLA) remain strong in trading on Thursday after the company posted profits that largely surprised Wall Street and Elon Musk made a new round of optimistic predictions.
The automaker reported improved operating profit margins, automotive gross profit margins excluding regulatory credit benefits, and better earnings per share than analysts expected for the July-September quarter. It also reported better-than-expected net revenues and its lowest cost per goods sold ever, at about $35,100 per vehicle.
It is the first time in seven quarters – that’s almost two years – that Tesla has seen its profits rise.
Cannacord Genuity analyst George Gianarikas reiterated his buy rating and raised his price target from $254 per share to $278 per share. A number of analysts from companies such as KGI Securities and Goldman Sachs (GS) have also increased their price targets. JP Morgan (JPM) analysts maintained an underweight rating and raised their price target from $130 per share to $135 per share.
“There is more wood to chop for Tesla and this recovery story still has some challenges ahead to convince the Street that 2025 will be a true watershed year,” Wedbush Securities analyst Dan Ives said in a note Thursday, adding that Tesla has taken its “first big step” towards recovery. Wedbush maintained its price target of $300 per share and an outperform rating.
Tesla shares were down about 2% when the market closed on Wednesday. As of early Thursday morning, shares are up more than 13%, putting the stock right about where it was before Tesla’s “disappointing” robotaxi product demonstration left Wall Street with more questions than answers.
On Wednesday, Musk gave investors a lot to look forward to, assuming his promises and “best guess” estimates prove true. He reiterated that the company aims to begin scaling up production of its Cybercab robotaxis in 2026, with plans to eventually make between 2 million and 4 million units per year; that’s more units than Tesla sells electric vehicles.
“That will be in more than one factory, but I think it’s at least 2 million units per year, and eventually maybe 4 million,” Musk said, adding that he is talking about his “best estimates.”
Musk also said Tesla expects to begin offering rideshare services next year in at least two states, California and Texas, where he also plans to seek regulatory approval for “fully autonomous, unattended” Full Self -Driving (FSD). Many valuations of Tesla’s current and future share price take into account a planned robotaxi network, which Musk has called a “combination of Airbnb (ABNB) and Uber (UBER).”
Tesla is operating its own rideshare network for employees at its facilities in California’s Bay Area, using current models and a driver at the wheel, executives said Wednesday. Palo Alto, California, is in talks to use Tesla’s recently unveiled robotaxi in its rideshare program, but the company doesn’t plan to start making these cars until 2026.
Tesla has sold more than 1.29 million electric vehicles so far in 2024, including 462,890 units delivered between July and September. That doesn’t give the company much wiggle room to reach or beat 1.8 million sales (the 2023 record) by the end of the year. But the automaker said it expects “slight growth” in deliveries this year, which would require sales of more than 516,000 units in the fourth quarter.
Musk said his “best guess” is that deliveries will reach 20% to 30% growth next year, citing Tesla’s plans to start selling more affordable models in early 2024.
For the latest news, Facebook, Tweet and Instagram.
