Sharp Rise on Strong Q3 Earnings and Optimistic Outlook for Next Year
Market Cap Increases by 138 Trillion Won in One Day
U.S. electric vehicle company Tesla's stock price soared 22% in a single day. The rally, the largest in 11 years, was driven by better-than-expected third-quarter earnings this year and CEO Elon Musk's remarks that vehicle sales could increase by up to 30% next year. Tesla's market capitalization surged by $100 billion (approximately 138 trillion KRW) in just one day.
On the 24th (local time) in the New York stock market, as of 2:29 p.m., Tesla's stock closed at $260.48 per share, up 21.92% from the previous day. This marked the largest daily gain in 11 years and 5 months since May 2013, when the stock price jumped 24% in a single day.
The sharp rise in Tesla's stock price was driven by an 'earnings surprise' that exceeded Wall Street's expectations the day before. After the market closed the previous day, the company announced third-quarter revenue of $25.182 billion and earnings per share (EPS) of $0.72. Market research firm FactSet had predicted Tesla would achieve $25.5 billion in revenue and an EPS of $0.60 for the period, so the EPS exceeded market expectations.
Until recently, Tesla's profits had declined due to price cuts and cutthroat competition with Chinese companies. However, strong sales of carbon emission credits and energy storage system (ESS) business, along with reduced cost of sales, led to higher-than-expected net income in the third quarter. In particular, Tesla earns credits from the government for reducing carbon emissions through pure electric vehicle sales, which it sells to other companies with high carbon emissions, generating $739 million in revenue.
Following the earnings announcement, CEO Musk's remarks triggered the stock price surge. He predicted that due to cost-cutting efforts lowering electric vehicle prices, car sales would increase by 20-30% next year. This significantly surpasses FactSet's forecast of 15% growth next year.
During the conference call, Musk also mentioned the 'Cybercap,' a prototype of the autonomous driving robotaxi unveiled earlier this month. He set a goal to start mass production of the Cybercap in 2026 and sell 2 million units annually. He also noted that recent interest rate cuts have reduced vehicle installment payments, leading to meaningful changes in demand.
Additionally, Musk urged the federal government to approve fully autonomous vehicles that operate without human supervision to drive on any road nationwide, stating, "If the government has an efficiency department, I will work to make this happen." Former President Donald Trump, the Republican presidential candidate, has announced plans to establish a 'Government Efficiency Commission' to eliminate unnecessary corporate regulations and appoint Musk to it if elected. Musk has donated $75 million (approximately 104 billion KRW) in campaign funds to Trump and is fully committed to his election.
Wall Street forecasts continue to predict that Tesla's stock price will maintain its upward trend for the time being.
Jim Munster, Managing Partner at Deepwater Asset Management, analyzed, "Investors received better-than-expected profits and delivery growth outlooks from Tesla's earnings announcement. Long-term investors have essentially received a golden carrot."
Alexander Potter, an analyst at Piper Sandler, said, "It was a better-than-expected quarter in almost every aspect, and especially more information was disclosed regarding next year's outlook. Even if Musk's forecast is optimistic, there is more upside potential than previously expected." He gave Tesla an 'Overweight' investment rating.
Morgan Stanley, which gave a 'Buy' rating on Tesla, analyzed Musk's forecast of 20-30% sales growth next year, stating, "It depends on whether the company can improve purchase likelihood through launching more affordable models, financing offers for consumers, and feature enhancements."
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