Tesla's stock price surged 19% after earnings, is the king making a comeback?

$Tesla(TSLA.US) At 00:00 Beijing time on October 24, Tesla released its Q3 2024 financial report

In Q3, Tesla's revenue reached $25.182 billion, a year-on-year increase of 8%, with adjusted net profit of $2.505 billion, also up 8% year-on-year

Revenue was slightly below Bloomberg consensus estimates, but adjusted net profit significantly exceeded expectations

After the earnings release, as of writing, Tesla surged 19% tonight, shaking off the sluggish trend following the robot taxi announcement

We believe neither revenue nor profit may be the highlight of this report; the biggest surprise is the turnaround in Tesla's automotive gross margin

In Q3, Tesla delivered 462,900 vehicles, up 6.4% year-on-year, marking the first year-on-year increase this year

However, amid fierce competition, the market remains concerned about declining company gross margins

According to Bloomberg's earlier estimates, Tesla's Q3 consolidated gross margin was expected at 16.92%, but this report proved analysts wrong—Tesla's Q3 consolidated gross margin reached 19.8%, far exceeding Bloomberg's expectations

Investors might question whether this was again due to Tesla's carbon credit sales

Indeed, Tesla's carbon credit revenue this quarter was $739 million, significantly boosting gross margins

But even excluding carbon credits, Tesla's automotive gross margin reached 17.1% this quarter, surpassing Bloomberg's 14.8% estimate

So why did Tesla's automotive gross margin rebound?

After all, Tesla offered various discounts and incentives this quarter to boost sales

Tesla's own explanation points to increased sales volume, reduced costs, higher FSD revenue, and expanded Cybertruck production capacity

Among these factors, the first few are routine, but Cybertruck introduces a new variable

This pickup truck, once called a "self-dug grave" by Musk, delivered solid numbers this quarter

Tesla announced Cybertruck as the third best-selling pure EV model in the U.S., trailing only Model 3 and Model Y

In Q3, Cybertruck sales reached 16,000 units, and more importantly, it achieved positive gross margin for the first time

Although Cybertruck still represents a small portion of Tesla's automotive portfolio, its margin turnaround means its drag on overall automotive gross margins has diminished

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Beyond automotive margin improvement, another highlight of this report is the energy business

This quarter, Tesla's energy revenue hit $2.376 billion, up 52.4% year-on-year

Although down from last quarter, it remains at high levels, with energy storage gross margin reaching 30.5%—a quarterly record for this business

For Shanghai's Mega Factory currently under construction, Tesla remains on track to begin Mega Pack deliveries in Q1 2025

During the earnings call, Musk shared some outlooks for new ventures as usual

He said the affordable Model 2 will launch in the first half of next year, and with low-cost cars and autonomous driving technology, his best guess is 20-30% automotive growth next year

For the newly announced Cybercab, Musk revealed little substantive information, only stating mass production would begin in 2026, with plans to produce 2 million Cybercabs annually

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Finally, a quick word on valuation

Even including substantial carbon credit profits, Tesla's current P/E ratio still exceeds 60x

This valuation clearly can't be sustained by automotive alone—Tesla still needs more "new stories" to materialize!

At this price, I wouldn't dare chase the rally blindly!

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