Tesla stock surges 20% after strong earnings

Tesla Surges
Tesla Surges

Tesla’s stock surged more than 20% last Thursday after the electric vehicle maker posted strong quarterly earnings, and CEO Elon Musk predicted robust vehicle growth of 20% to 30% in 2025. Though mixed, the company’s latest results delivered a critical element that investors had been eagerly awaiting: profit. Tesla posted its most significant quarterly profit since mid-2023, rebounding after four straight quarters of declining profits.

This came despite revenue expectations falling short, which many had feared would continue to drag the company down. Musk’s confident projections during the earnings call drove the optimism.

He announced that Tesla could see substantial vehicle sales growth and revealed that the long-awaited Cybertruck had finally achieved profitability for the first time in its quarterly sales.

Investors took this as a sign of the company’s ability to innovate out of production issues. Musk was clear about his vision for Tesla’s future on the call with analysts.

My prediction is Tesla will become the most valuable company in the world, and probably by a long shot,” he declared.

Tesla’s push into autonomous driving is central to its future strategy, with plans to roll out “Cybercab” autonomous vehicles and production targets in the millions per year.

Tesla’s robust quarterly performance

Wall Street analysts remain optimistic about Tesla’s growth prospects.

Bank of America’s John Murphy raised his price target due to Tesla’s strong quarter, noting improved gross margins and expected sales growth in the Energy and Services segment. He sees a “well-positioned” 2025 for Tesla, with a “second growth wave” anticipated. Morgan Stanley’s Adam Jonas focused on Musk’s prediction of 20% to 30% volume growth in 2025, emphasizing the importance of Tesla’s ability to improve affordability through cheaper models, financing offers, and enhanced features.

Tesla remains Morgan Stanley’s “top pick.” Deutsche Bank’s Edison Yu praised Tesla’s Q3 margins in both the auto and energy businesses and anticipated a sequential rise in Q4 deliveries. He agreed that Musk’s projected volume growth was significantly above expectations, supported by the upcoming launch of a cheaper EV in early 2025.

Wedbush’s Dan Ives called the quarter an “early Christmas present” for investors, highlighting Tesla’s cost reduction and production efficiency. He believes that advancements like the Cybercab will materialize in the next two to three years and maintain Wedbush’s Outperform rating and $300 price target. Despite the positive outlook, questions remain about the ongoing delay of the revamped Roadster, an upgraded version of Tesla’s original sports car.

Musk claimed it is “close” to finalization but hinted that its release, when it comes, will be “spectacular.”

Adria Woodman

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