Tesla (TSLA) stock started rallying the next morning after the company’s Q3 2024 Earnings Call and financial update report was published on its investor relations website on Wednesday (audio and PDF below).
On Thursday, Tesla’s stock price increased by around ~22%. It surged from $213.65 to $260.48 at market close on the trading day.
On Friday, the rally continued and a TSLA share peaked at $269.19 at market close for the rest of the weekend.
Tesla (TSLA) Q3 2024 Profitability
The Tesla stock surge rally is fueled by the company reporting a gross profit of $4,997 million ($4.997B) Q3 2024 which is a 20% increase compared to Q3 2023.
Tesla’s total GAAP gross margin also increased by 195 basis points (bp) from 17.9% to 19.8% year-over-year (YoY) in Q3.
Compared to Q2 2024, Tesla’s gross profit margin grew more than 9%. Tesla achieved a gross profit of $4,578 million in Q2 vs $4,997 million in Q3. So, Tesla also performed well in QoQ profit margin increase alone while other automakers are struggling to to show some profit on the balance sheet.
Tesla wrote in its profitability report:
- $2.7B GAAP operating income in Q3
- $2.2B GAAP net income in Q3
- $2.5B non-GAAP net income1 in Q3
Our operating income increased YoY to $2.7B in Q3, resulting in a 10.8% operating margin.YoY, operating income was primarily impacted by the following items:
- + lower cost per vehicle, including lower raw material costs, freight and duties and other one-time charges
- + growth in Energy Generation and Storage and Services and Other gross profit
- + higher FSD revenue recognition YoY for releases related to Cybertruck and certain features such as Actually Smart Summon
- + growth in vehicle deliveries
- + higher regulatory credit revenue
- + decrease in operating expenses including cost-reduction efforts
- – reduced S3XY vehicle ASP
Investor/Analyst Reactions
Wall Street took Tesla’s report of strong margins positively. Compared the legacy OEM automaker’s Tesla showed strong margins even if we remove regulatory credits from the report.
“17.1% gross margin ex-credit was a strong beat,” said Tom Narayanan, Lead Equity Analyst, Global Autos. “I do think if you take out those FSD-deffered revenue piece, you still come out with a very strong gross profit margin ex-credit,” Tom added.
“The margins were exceptional; They continue to show time and time again that they’re able to lower the cost of production and be the only one that can make money on EVs,” said George Gianarikas and analyst at Canaccord Genuity.
Related: Tesla HW3 cars to get free hardware upgrades for Unsupervised FSD, Elon Musk on Q3 call
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