Tesla Beats Profit Forecast; The stock surges in late trading

The electric car manufacturer Tesla reported tonight a surprising increase in net profit in the first quarter, for the first time since the company’s profits began to decline earlier this year. Net profit jumped 17% to about $2.17 billion (earnings per share of 72 cents). Analysts’ forecasts were for earnings per share of 58 cents. However, Tesla missed on revenue, which rose 8% to $25.18 billion, while analysts’ forecasts were for $25.37 billion. Tesla shares jump more than 9% in late trading.

Revenues from the automotive sector increased by 2% to $20 billion, compared to $19.63 billion in the corresponding period. Energy generation and storage revenue jumped 52% to $2.38 billion, while utility and other revenue jumped 29% to $2.79 billion.

In the reports, Tesla said it expects “modest growth” in vehicle deliveries this year, another positive surprise compared to expectations, which had seen deliveries fall from 1.81 million in 2023 to 1.78 million.

Earlier this month, Tesla reported deliveries of 462,890 vehicles in the third quarter. The deliveries are the closest estimate to sales reported by Tesla. The company also stated that it produced 469,796 vehicles in the quarter.

A roller coaster in Mania

The company has suffered a rollercoaster in the past year. Just a few weeks ago, Tesla unveiled the autonomous vehicle “Robotaxi”, an event that investors have been waiting for for 8 years. Since the event was announced, in April, the company’s stock has risen by about 50%, which also resulted from the report in early October of a 6% increase in Tesla’s global vehicle deliveries compared to last year.

But it seems that the correction in Tesla stock did not hold water. After the launch of Robotaxis, the company’s stock plunged by almost 9%, wiping out about 70 billion dollars in one day. The investors hoped that despite the upheavals that have afflicted the company for two years, the conflict between the founder and the board of directors, the shuffling of sales, and the competition from China – once the vision of the autonomous vehicle and the Optimus is realized, Tesla will be the leader in the next technological revolution. But instead, the investment event everyone was waiting for left investors and analysts with more questions than answers.

Meanwhile, Tesla continues to underperform the stock. Since the beginning of the year, the stock has fallen by about 11%, while the S&P 500 index has risen by about 24% in the same period, and in the last month alone, the stock value has shed about 12%.

“Is this it? Disappointing lack of detail”

At the event, Tesla launched the autonomous taxi called the Cybercab – it is an autonomous vehicle with two seats, without a steering wheel or pedals, yet “20 times safer than a normal vehicle”, Musk promised. The company presented 20 units of it and an expected price of about 30 thousand dollars per unit. Musk said he expects the Cybercube to go into production by 2026 or before 2027. Investors didn’t seem to like what they saw. Morgan Stanley’s analyst Adam Jones wrote about the event that “is this it? A disappointing lack of detail,” and that “we were disappointed by the substance and lack of detail at the announcement event. As such, we expected Tesla to be under pressure following the event,” he said. The analysts were looking for data on the improvements in autonomous driving as well as different strategies in the field. Wells Fargo analysts agreed with him and even wrote that the event was “dazzling” and with too little substance.

On the one hand, investors are trying to understand what “next year” means as a future promise for the arrival of autonomous driving, and on the other hand, they are trying to understand when Tesla will launch a vehicle at a lower price that will suit the masses.

Despite the criticism, Bank of America chose to look at the positive points in the launch. The American Bank emphasized that the event met expectations, despite the absence of specific details such as a business model and timetables. Along with this, the bank raised the target price of the stock to $255 per share.