Tesla’s stock reached its highest close in over a year on Friday, marking a significant comeback as investors and analysts praised the electric vehicle company’s third-quarter results. After a record-breaking 22% jump on Thursday, Tesla shares climbed an additional 3.4% on Friday, closing at $269.23 – their highest finish since September 2023. With this rally, Tesla’s stock has erased its previous loss for the year and is now up 8.4% for 2024, still behind the Nasdaq’s 23% increase.
Analysts Boost Price Targets Following Earnings Report
Analysts at Piper Sandler joined other firms in increasing their price targets for Tesla after its Q3 earnings report. Piper Sandler, which maintained its “buy” rating on the stock, raised its 12-month target from $310 to $315, citing “higher deliveries and higher margins.” The move reflects optimism about Tesla’s ability to scale production and improve profit margins despite missing revenue expectations.
Tesla’s Q3 revenue came in at $25.18 billion, slightly below the expected $25.37 billion but up 8% from the previous year. Tesla outperformed on adjusted earnings per share, delivering 72 cents versus the average analyst estimate of 58 cents, highlighting its profitability improvements.
Key Profit Boosters: Regulatory Credits and Full Self-Driving (FSD) Revenue
Tesla’s profitability in the quarter was significantly bolstered by $739 million in revenue from environmental regulatory credits, which JPMorgan Chase analysts described as a “potentially unsustainable driver” of earnings. Another $326 million came from Tesla’s Full Self-Driving (FSD) Supervised system, showcasing its value to the bottom line.
Tesla CEO Elon Musk expressed optimism on the earnings call, projecting vehicle growth of 20% to 30% next year, driven by lower-cost vehicles and the “advent of autonomy.” Analysts surveyed by FactSet, however, forecast a more conservative delivery growth rate of around 15% for 2025.
Mixed Reactions to Musk’s Autonomy Claims
Musk reaffirmed his commitment to autonomy, stating that Tesla plans to start production of its “Cybercab,” a futuristic robotaxi with butterfly doors and no steering wheel, by the end of 2026. Tesla also plans to test driverless ride-hailing in California and Texas next year, albeit with existing vehicles that require a driver to be ready to intervene.
However, analysts have cautioned investors about Musk’s timeline for autonomy. Bernstein analysts noted Musk’s “long history of being overly optimistic about FSD,” emphasizing that research shows Tesla still “lags well behind competitors” in the race for self-driving technology.
Musk’s Net Worth Soars Amid Rally, But Tesla Still Faces Competition
Thanks to Tesla’s two-day stock surge, Musk’s net worth has ballooned by roughly $30 billion, bringing his total estimated wealth to $274 billion. This places him more than $60 billion ahead of Larry Ellison, Oracle’s founder and the world’s second-richest person.
Still, Tesla’s stock remains 34% below its all-time high, and competition is only intensifying. In China, Tesla is up against strong domestic players such as BYD, Geely, Li Auto, and Nio, while in the U.S., traditional automakers Ford and General Motors are making progress in EV sales despite recently scaling back some electrification efforts.
Tesla’s sharp rise has certainly energized investors, yet the EV market remains a competitive field. As Tesla continues to expand its product line and work toward autonomous driving, the next few years will be pivotal for the company in maintaining its edge.
