Tesla shares are rising after investors cheered its third-quarter earnings report

Tesla stock (TSLA) rose sharply on Thursday following mixed third-quarter earnings results after the bell on Wednesday.

Investors cheered adjusted earnings per share and higher gross margins, as well as news that Tesla's cheaper electric vehicle is scheduled to enter production next year. CEO Elon Musk also said in an earnings call that Tesla's volume growth could be 20% to 30% next year.

Tesla shares rose 14% in early trading, setting up a tens of billions of dollars increase in the company's market valuation.

Tesla reported revenue of $25.18 billion, lower than the $25.4 billion expected according to the Bloomberg consensus, but higher than the $25.05 billion reported in the second quarter and also the 23rd quarter .4 billion that Tesla reported a year ago. Tesla posted adjusted earnings per share of $0.72 versus expected $0.60 on adjusted net income of $2.5 billion and free cash flow of $2.9 billion.

The closely observed gross margin was 19.8%, well above the expected 16.8%.

“We delivered strong results in the third quarter with growth in vehicle deliveries both sequentially and year-over-year, resulting in record volumes in the third quarter,” the company said in its earnings presentation. “Preparations are ongoing for our range of new vehicles – including more affordable models – which we will launch in the first half of 2025.”

Earlier this month, Tesla announced third-quarter deliveries that fell slightly short of expectations, causing the stock to fall.

Tesla said it delivered 462,890 vehicles in the third quarter, up 6.4% from the previous quarter, marking the first quarter of delivery growth this year. The numbers were also higher than the 435,059 electric vehicles the company delivered in the same period last year. However, according to Bloomberg, Wall Street had expected Tesla to be closer to 463,897.

“The updated Model 3 ramp continued successfully in the third quarter, with higher overall production and lower cost of goods sold compared to the previous quarter. “Cybertruck production increased sequentially and achieved a positive gross margin for the first time,” Tesla said in its report.

Tesla said it expects vehicle deliveries to see “slight growth” in 2024. CEO Elon Musk added during the conference call that 20% to 30% growth is possible next year, although he called that a “best estimate.”

Ahead of Tesla's third-quarter earnings release, shares were down about 11% since Tesla unveiled its robotaxi called Cybercab on Oct. 10 at its flashy “We, Robot” event at the Warner Bros. studio lot in Burbank, California.

Investors and analysts wanted more details about Tesla's “We, Robot” event on the Cybercab itself and detailed test plans and questions about the development of Tesla's sub-$30,000 electric vehicle called the Model 2.

The story continues

In the conference call, Musk said the Cybercab will reach mass production in 2026 rather than just start production, and the company is targeting 2 million Tesla Cybercabs per year.

Tesla and Musk added that the company remains on track to produce new vehicles, likely including a cheaper electric vehicle, in the first half of next year.

Musk also said the company is testing hailing and driving robotaxi in the San Francisco area for employees with safety drivers behind the wheel.

Tesla reported that its power generation and storage business achieved a record gross margin of 30.5% in the third quarter and that it expects the business to more than double year-over-year in 2024.

Pras Subramanian is a reporter for Yahoo Finance. You can keep following him X and further Instagram.

Click here to get the latest earnings reports and analysis, earnings information and expectations, and company earnings news

Read the latest financial and business news from Yahoo Finance