Tesla Inc.‘s TSLA third-quarter earnings report revealed signs of a significant turnaround in gross margins, leading prominent Wall Street analyst Dan Ives to suggest that the worst may be behind the electric vehicle maker.
What Happened: The company reported $25.18 billion in total revenue for the third quarter, representing an 8% increase year-over-year, though slightly missing analysts’ expectations of $25.37 billion. Automotive revenue grew by 2% to $20 billion compared to the same period last year.
“Tesla made a huge step in the right direction with a massive margin rebound and a strong outlook,” said Ives, Managing Director at Wedbush Securities, in a post on X (formerly Twitter). “The Tesla narrative positively changes for the Street looking ahead after this margin performance and delivery outlook.”
In an interview with CNBC Overtime, Ives emphasized the significance of Tesla’s gross margin recovery, describing it as a “goldilocks” scenario for bullish investors while presenting a “nightmare” for bears. The margin improvement comes after several quarters of pressure due to aggressive price cuts across Tesla’s vehicle lineup.
“The whole story is about gross margin,” Ives stated during the interview. “Showing the worst is in the rearview mirror… that gross margin is a goldilocks for any bull.”
Why It Matters: The electric vehicle giant reported third-quarter revenue of $25.18 billion, marking an 8% year-over-year increase. Despite missing the Street consensus estimate of $25.37 billion, Tesla’s automotive revenue for the quarter was $20 billion, a 2% year-over-year rise.
Tesla’s CEO Elon Musk has highlighted the company’s steady revenue growth over the years, describing it as “progress.” However, the company’s revenue missed the Street consensus estimate, despite a rise in vehicle deliveries, energy generation, and full self-driving revenue.
Meanwhile, Tesla is betting on robotaxis as one of its next growth phases, with a former employee turned rival suggesting that autonomous vehicles won’t be released until the 2030s.
Price Action: Tesla Inc.’s stock closed at $213.65 on Wednesday, down 1.98% for the day. In after-hours trading, the stock surged by 12.10%. Year to date, Tesla’s stock has declined by 14.00%, according to data from Benzinga Pro.
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Image via Tesla
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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