Tesla delivers solid Q3 results as Musk's company returns to profit growth – shares jump 12%

Topline

Tesla posted higher third-quarter profits than Wall Street expected on Wednesday, as Elon Musk's electric vehicle maker reported its first year-over-year profit growth for 2024, to investors' delight.

Important facts

Surprising fact

Tesla's after-hours rally represents a whopping $81 billion in additional market capitalization.

Big number

$739 million. That's the amount Tesla reported in automotive regulatory credits for the quarter, well above estimates of $539 million. The credits that Tesla sells to gasoline car makers to help them comply with government regulations are a key profit driver for Tesla because the electric vehicle maker can sell them at a virtually 100% margin. The company's earnings release noted that other automakers “are still lagging behind in meeting emissions requirements.”

Important background

Wednesday's earnings report caps a turbulent three-week stretch of major catalysts for Tesla stock. The company reported third-quarter vehicle deliveries on Oct. 2, sending shares down 3% as investors reacted to the 462,890 deliveries, which beat consensus expectations but fell short of some companies' forecasts of 470,000. Tesla's Robotaxi Day on October 10 sparked a sharper sell-off in the evening, with shares plunging 9% during the following trading session as analysts largely blamed the event's focus on a lack of details and firm timelines on the company's self-driving vehicles company pointed out. According to Forbes calculations, Musk is the richest person in the world with a net worth of about $245 billion. Tesla shares had lost nearly 15% year-to-date through Wednesday's close, compared with the more than 20% rise in the U.S. S&P 500 stock index. Musk has advised investors to only hold Tesla shares if they are interested are convinced that his company can solve autonomous driving.

Surprising fact

Ahead of the third-quarter earnings report, consensus forecasts were for Tesla to report its worst annual net profit this year since 2020, with profit expected to fall more than 45% from 2022's record.

tangent

In addition to Tesla's packed October, it's been a busy time for Musk, who has made several appearances on the campaign trail in support of former President Donald Trump. Musk donated around $75 million to a pro-Trump group in July, August and September. Musk's support for Trump comes despite the Republican candidate's repeated skepticism about electric and autonomous vehicles, Tesla's livelihood.

Further reading

ForbesTesla shares lose almost $70 billion: Why Wall Street isn't initially impressed by the Robotaxi eventFrom Derek Saul

ForbesElon Musk sees Tesla's future in self-driving robotaxis, but is far behind WaymoFrom Alan Ohnsman