Telsa Stock Posts Third-Quarter Profit Surge Despite Lower Expected Revenue | Tesla

Tesla shares rose 8% after reporting its third-quarter results on Wednesday. The electric car maker rebounded from a difficult second quarter and beat Wall Street's earnings per share expectations. The company reported earnings per share of $0.72, beating investors' forecast of $0.60.

At the end of the second quarter, Tesla CEO Elon Musk said the nearly 50% drop in profits was temporary and due to difficulty competing with cheaper or discounted electric vehicles from rival companies such as BYD. “We don’t view this as a long-term issue,” Musk said in July, “but rather as a more short-term issue.”

However, Tesla fell slightly short of expected revenue. The company reported revenue of $25.18 billion at the end of the third quarter, narrowly missing Wall Street's revenue forecast of $25.43 billion.

“Despite ongoing macroeconomic headwinds and other setbacks in electric vehicle investments, we remain focused on expanding our vehicle and energy product range, reducing costs and making important investments in AI projects and production capacity,” the company said in a press release. “We believe these efforts will allow us to benefit from ongoing transformation in the transportation and energy sectors.”

Tesla delivered 462,890 vehicles at the end of the third quarter, up from 443,956 in the second quarter. Investors will be eager to learn more about whether the company is on track to reach its vehicle deliveries of 1.8 million in 2023. The company said it expects vehicle deliveries to grow slightly by the end of the year. Dan Ives from financial services firm Wedbush Securities remains confident. Achieving that goal will be “a solid achievement considering there were many exciting moments in the first half of the year,” he said in a note to investors.

After the disappointing launch, investors will also be looking for more information about the company's robotaxis. After unveiling the company's much-touted robotaxi earlier this month with few details, Tesla shares fell nearly 9%, shaving more than $60 billion off the company's value. At the time, Tom Narayan, an analyst at Royal Bank of Canada, said in a note to investors that the event focused more on branding and marketing Musk's vision “rather than giving concrete numbers that we can model,” as expected these events.

Musk may also have to answer for his recent focus on politics. In addition to founding the America Pac, the CEO of the giveaway has raised legal questions and sparked calls for law enforcement to investigate Musk and the practice, for example from people like Pennsylvania Gov. Josh Shapiro. It is a federal crime to attempt to pay people to vote or register to vote.

Musk's activities appear to be having an impact on consumer sentiment when it comes to purchasing Teslas. 31 percent of buyers surveyed by Edmunds, a car buying website, said they would be less likely to buy a Tesla because of Musk, while 37 percent of respondents said they would wait for the election results to decide whether to buy a Tesla would buy a Tesla and 44% of Democratic women said they would be less likely to buy a Tesla because of Musk.

However, that hasn't stopped Tesla from capturing a larger share of the electric vehicle market. According to Edmunds, Tesla's market share reached an all-time high of 8.3%, up from 7.5% in the same quarter of 2023.

Musk is also facing legal scrutiny elsewhere. The EU is considering fining X based on the total sales of SpaceX, Neuralink, xAI and the Boring Company. The bloc accuses the social media company of failing to respond to illegal content and disinformation on its platform. Fines can be up to 6% of a company's annual turnover. However, Tesla will likely be exempt from this penalty because it is a publicly traded company and is not fully owned by Musk.