Technology

Tesla stock soars 20%, heads for best day in over a decade on Musk’s 2025 growth projection

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Elon Musk attends ‘Exploring the New Frontiers of Innovation: Mark Read in Conversation with Elon Musk’ session during the Cannes Lions International Festival Of Creativity 2024 – Day Three on June 19, 2024 in Cannes, France.
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Tesla shares soared roughly 19% on Thursday morning, putting the stock on pace for its best day in more than three years, following the company’s better-than-expected earnings report.

The company late Wednesday reported revenue of $25.18 billion, which came in just under analysts’ expectations of $25.37 billion, but was up 8% compared to a year earlier. Tesla reported earnings per share of 72 cents adjusted, topping the average analyst estimate of 58 cents.

“We expect this surprising earnings beat to power a strong positive reaction in Tesla shares Thursday, given the degree to which investors have become conditioned to earnings misses from the company,” analysts at JPMorgan wrote in a note.

Tesla’s profit margins in the third quarter were boosted by $739 million in revenue for automotive regulatory credit, which the JPMorgan analysts noted as a “potentially unsustainable driver” of cash flow performance for the future.

Automakers are required to obtain a certain amount of regulatory credits every year, and if they can’t meet the target, they can buy credits from other companies. Tesla has excess credits because it only makes electric vehicles.

Tesla CEO Elon Musk said during an earnings call Wednesday that his “best guess” is that “vehicle growth” will reach 20% to 30% next year, citing “lower cost vehicles” and the “advent of autonomy.” Analysts surveyed by FactSet were expecting delivery growth of about 15% for 2025.

Analysts at Morgan Stanley who recommend buying the stock, called Musk’s 2025 vehicle delivery growth prediction a “maybe.” They set their estimate at 14%.

It “clearly depends on the company’s ability to improve affordability through cheaper model (next gen) introduction, financing offers and improved features,” the Morgan Stanley analysts wrote in a note on Thursday.

With Tesla’s rally on Thursday, the stock erased its loss for the year and is now up almost 2%, though it still trails the 22% gain for the Nasdaq.

— CNBC’s Lora Kolodny contributed to this report.

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