Tesla Shares Jump 13% Following Positive Sales Outlook from Elon Musk

Shares of Tesla soared over 13% in pre-market trading on Thursday after CEO Elon Musk presented an optimistic sales forecast to investors. Musk projected that the company’s electric vehicle (EV) sales could increase by 20% to 30% in the coming year, spurred by the rollout of more affordable models.

At the close of trading on Wednesday, Tesla's market capitalization approached nearly $670 billion. Following Musk's announcement, the company's value could potentially rise by an additional $80 billion.

In its recent financial report, Tesla reported a profit of $2.17 billion for the third quarter, which covers the period from July to September. This figure surpasses the $1.85 billion profit earned during the same quarter last year.

According to calculations by Reuters, Tesla’s profit margin from vehicle sales, excluding revenue from regulatory credits, increased to 17%, up from 14.6% in the previous quarter.

During a conference call with analysts, Musk revealed that Wall Street’s expectations for sales growth were lower at about 14.9%, based on analysis from 24 analysts conducted by Visible Alpha.

In encouraging news for the company, Tesla also shared that its costs for manufacturing vehicles, referred to as cost of goods sold per vehicle, had decreased to an all-time low of approximately $35,100.

In the third quarter, Tesla’s adjusted profit per share reached 72 cents, exceeding the average estimate of 58 cents. Despite some initial skepticism from Wall Street regarding the company’s recent unveiling of its robotaxi, analysts felt reassured by Musk's comments about lower manufacturing costs.

“No EV company is even profitable,” Musk emphasized during the call, noting that Tesla remains profitable in what he described as a challenging automotive market.

Shares of Tesla's competitors, including Rivian and Lucid, saw modest increases in pre-market trading, rising between 1% and 2%.

Musk announced plans for the introduction of driverless vehicles that will offer paid rides next year, contingent upon obtaining necessary regulatory approvals in California and Texas.

In addition to rolling out robotaxis, Tesla has seen significant growth in the adoption and sales of its Full Self-Driving (FSD) software, which experienced a boost following the demonstration event for the robotaxi. The company also offered FSD free for a month to existing customers for the second time this year to encourage uptake.

After reducing vehicle prices last year, Tesla began implementing appealing financing options this spring to stimulate demand among consumers. Since the start of the year, the company has successfully delivered 1.29 million vehicles.

Despite needing to deliver an additional 514,925 vehicles to exceed last year's total, some analysts have expressed relief that aggressive incentive strategies have not significantly harmed profit margins. Matt Britzman, a senior equity analyst at Hargreaves Lansdown who holds Tesla shares, remarked, “The fear going into results was that the huge incentives effort to push volumes into the tough EV market would materially dent margins – that doesn’t look to be the case.”

For the third quarter, Tesla reported revenues of $25.18 billion, slightly below the anticipated figure of $25.37 billion but showing an increase from $23.35 billion in the same quarter of last year. Additionally, the company recognized its second-highest quarter of revenue from regulatory credits, amounting to $739 million, a 33% rise year-over-year, though down from $890 million in the second quarter.

Overall, the positive projections from Musk have reinvigorated investor confidence in the electric vehicle market and Tesla’s notable standing within it.

Tesla, stocks, sales