A more profitable Tesla is still a pricey ride
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Tesla’s third-quarter results gave the EV maker’s stock price a strong boost on Thursday, recovering the ground lost following the company’s disappointing Robotaxi event earlier this month. The reaction wasn’t entirely unwarranted: Tesla managed to surprise Wall Street by reversing the steady decline its automotive gross margins have suffered over the past two years. Strong growth in sales and gross profits in the company’s energy generation and storage segment also helped.
Tesla’s total operating profit came in at $2.7 billion for the quarter—37% above Wall Street’s consensus forecast, according to FactSet. Still, Tesla’s overall growth is far below normal, or at least what has long been the company’s version of normal. Total automotive revenue rising 2% year over year in the third quarter comes after two consecutive quarters of declines.
That is also a fraction of the 45% growth Tesla’s core business averaged on a quarterly basis from 2020 through 2023. The world’s largest EV maker can’t escape the gravity of a global auto-sales slowdown. And even the profit boost might not be built to last.
“Sustaining these margins in Q4, however, will be challenging, given the current economic environment," said Tesla Chief Financial Officer Vaibhav Taneja on the company’s conference call on Wednesday. Analysts boosted their profit targets anyway. The consensus projection for Tesla’s per-share earnings over the next four quarters rose more than 5% following the company’s report.
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