Earnings report sharing/Tesla's EPS beats expectations!? Stock price takes off?

$Tesla(TSLA.US) announced its Q3 earnings report on October 23rd. The data showed that revenue was below expectations at $25.18 billion, lower than the expected $25.43 billion. However, EPS exceeded market expectations at $0.72, marking the first time in several quarters that it surpassed forecasts. The stock price surged over 10% in after-hours trading! What other data should we pay attention to? Let’s take a look together～

Q3,2024

Revenue increased 8% year-over-year to $25.18 billion, compared to $25.5 billion last quarter and below the market expectation of $25.43 billion;

By segment:

Automotive sales: $20.016 billion, up from $18.99 billion last quarter, accounting for the majority of total revenue;

Carbon credit sales: $739 million, down from $890 million last quarter, accounting for about 3% of total revenue;

Energy generation and storage: $2.376 billion, down from $3.014 billion last quarter;

Services and other revenue, including out-of-warranty vehicle repairs, etc., reached $2.79 billion, up from $2.608 billion last quarter, with a year-over-year growth rate of about 29%;

EPS increased 9% year-over-year to $0.72, higher than the market expectation of $0.60;

Gross margin rose 1.9 percentage points year-over-year to 19.8%, higher than the market expectation of 17%;

Operating profit surged 54% year-over-year to $2.717 billion, with an operating margin of 10.8%, up from 6.3% last quarter;

Net profit was $2.167 billion, and NON-GAAP net profit, excluding one-time expenses, was $2.505 billion;

Free cash flow was $2.742 billion, up from $1.342 billion last quarter and higher than the market expectation of $1.742 billion;

Deliveries increased 6% year-over-year to 463,000 units, slightly below the market expectation of 463,900;

Global days of supply for vehicles in Q3 increased to 19 days from 18 days last quarter and 16 days in the same period last year;

Future Expectations

Electric vehicle delivery growth in 2025 may reach 20-30%;

Production of new models, including affordable vehicles, is expected to begin in the first half of 2025, but no further details were provided;

Summary

Although this quarter’s revenue continued the positive year-over-year growth trend from last quarter, it still fell short of market expectations. This was mainly due to increased deliveries, growth in the energy business, revenue from FSD driven by the Cybertruck, and carbon credit sales, partially offset by a decline in average selling price (ASP). Deliveries grew 4% quarter-over-quarter to 463,000 units, ending the trend of year-over-year declines in the previous two quarters. Production also increased 14% quarter-over-quarter to 469,800 units (no details were provided about Cybertruck production). Notably, deliveries were again lower than production this quarter, indicating inventory and sales pressures remain. The global days of supply also reflect rising inventory pressure.

In terms of gross margin, the company-wide gross margin was 19.8%, up from 18% last quarter. Based on automotive sales divided by deliveries, the average selling price per vehicle was approximately $40,681, lower than $42,711 in the same period last year and $41,738 last quarter. The gross margin per vehicle also declined by nearly 1% year-over-year. Tesla stated it will continue to control and reduce costs across production to improve affordability. The current cost of goods sold (COGS) per vehicle has reached a historic low of around $35,000, with Tesla aiming to reduce it below $30,000.

Finally, regarding future developments, Tesla released FSD V12.5 this quarter, with a fivefold increase in parameters, and plans further improvements next quarter. It also launched "Actually Smart Summon" and introduced FSD to Cybertruck customers to boost adoption. For Robotaxi, Tesla revealed plans for mass production by 2026, targeting at least 2 million Cybercabs annually, with confidence in regulatory approval next year to launch services in California and Texas. On the AI front, progress was made this quarter, including expansion at the Texas factory, which now has 29,000 H100 GPUs and is expected to reach 50,000 by the end of October. AI computing power increased 75% this quarter, and Musk mentioned that XAI is developing generative AI technology, Grok, which will eventually be integrated into vehicles, though no timeline was provided.

Compared to historical levels, Tesla’s stock price is relatively cheap, though its valuation remains higher than peers. However, Tesla is not just a car company, and high expectations remain for its other ventures. Going forward, watch for sales performance, margin improvements, new model launches, and progress on Robotaxi and other initiatives.

What do you think? Feel free to share your thoughts in the comments! If you liked this, don’t forget to like, share, and comment. Most importantly, happy investing and may your profits grow!