Tesla Inc [TSLA]
0.38%
$
281.59 Exchange: NASDAQ Sector: Consumer Cyclical Industry: Auto Manufacturers
Q3 2024 ReportPublished: Oct 24, 2024
Earnings Highlights
Revenue of $25.18B up 7.9% year-over-year
EPS of $0.62 increased by 17.2% from previous year
Gross margin of 19.8%
Net income of 2.17B
"Elon Musk: 'This quarter actually is a record Q3 for us... So, congratulations to the teams that made it happen in Tesla. That's staggeringly immense amount of work to make 7 million cars.'" - Elon Musk
Tesla Inc (TSLA) Q3 2024 Financial Results: Record Deliveries Amid Industry Challenges
Executive Summary
In Q3 2024, Tesla Inc showcased remarkable financial resilience, achieving record deliveries of electric vehicles (EVs) despite witnessing year-over-year declines in order volumes across the industry. The quarter was highlighted by a total revenue of $25.18 billion, a notable 7.85% increase year-over-year, despite a slight dip from the previous quarter. Gross profit stood at $4.99 billion, reflecting a gross profit margin of 19.84%. The company also recorded an operating income of $2.72 billion, indicating operating leverage from increased deliveries and cost controls that management anticipates will sustain profitability through the rest of the year. Management expressed confidence in the future, projecting vehicle sales growth of 20-30% for 2025, particularly with plans for more affordable models to accelerate EV adoption.
Balance Sheet Highlights:
- Cash and Cash Equivalents: $18.11 billion
- Total Assets: $119.85 billion
- Total Liabilities: $49.14 billion
- Total Stockholder's Equity: $69.93 billion
Cash Flow Statements:
- Net Cash Provided by Operating Activities: $6.26 billion
- Free Cash Flow: $2.74 billion
Tesla's performance metrics reflect not only effective operational management but also strategic investments in production capabilities and technology, particularly surrounding the development of autonomous vehicles and energy products.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
25.18B
7.85%
-1.25%
Gross Profit
5.00B
19.60%
9.15%
Operating Income
2.72B
54.02%
69.28%
Net Income
2.17B
16.95%
46.62%
EPS
0.68
17.24%
47.83%
Key Financial Ratios
currentRatio
1.84
grossProfitMargin
19.8%
operatingProfitMargin
10.8%
netProfitMargin
8.61%
returnOnAssets
1.81%
returnOnEquity
3.1%
debtEquityRatio
0.18
operatingCashFlowPerShare
$1.96
freeCashFlowPerShare
$0.86
priceToBookRatio
11.96
priceEarningsRatio
96.53
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Management Insights Record Deliveries: Elon Musk emphasized the accomplishment of achieving record deliveries amidst an industry backdrop where competitors have seen order declines, stating, "No EV company is even profitable... it is notable that Tesla is profitable despite a very challenging automotive environment."
Growth Potential: Management anticipates strong growth moving into 2025, with Musk expressing, "I do want to give some rough estimate, which is I think it's 20% to 30% vehicle growth next year."
Future Guidance: The company is on track to introduce more affordable models, slated for the first half of 2025, which is pivotal for expanding consumer access to Tesla vehicles. Musk noted, "We're still on track to deliver more affordable models...
Elon Musk: 'This quarter actually is a record Q3 for us... So, congratulations to the teams that made it happen in Tesla. That's staggeringly immense amount of work to make 7 million cars.'
— Elon Musk
Vaibhav Taneja: 'We've seen elevated levels of regular 2 week credit sales with over $2 billion of revenues so far this year.'
— Vaibhav Taneja
Forward Guidance
### Future Outlook
Looking forward, Tesla's guidance indicates a strong potential for revenue growth buoyed by new model launches and expanding production capabilities. The company is committed to scaling autonomous vehicle production, with notable advancements expected in the Cybercab initiative, targeting production of 2 million units annually beginning in 2026. Management highlighted the importance of regulatory approval processes and anticipated improvements in autonomous technology to sustain competitive advantage. Investors should monitor potential shifts in interest rates which could substantially influence demand for electric vehicles. Senior leadership indicates a focus on controlling production costs and maintaining margins in the wake of fluctuating economic conditions, signaling proactive adjustment strategies to mitigate downside risks.
Moreover, Tesla's energy segment continues to gain momentum, demonstrating robust demand for its Megapack and Powerwall products, which are crucial for advancing its sustainability goals and diversifying revenue streams.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
TSLA Focus
19.84%
10.80%
3.10%
96.53%
XPEV
15.30%
-18.30%
-5.64%
N/A
LI
21.50%
8.01%
4.23%
17.30%
RIVN
-44.90%
-1.34%
-18.60%
-2.59%
LCID
-1.06%
-3.85%
-37.00%
-2.07%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
In summary, Tesla Inc.'s Q3 2024 financial results reflect solid operational performance and continuing strategic growth initiatives that position the company favorably within the consumer cyclical sector. With strong cash flows and profitability metrics, Tesla presents a compelling investment case. However, it is imperative for potential investors to weigh ongoing risks prevalent in the automotive industry against the backdrop of Tesla's aggressive expansion strategies and robust demand for its products. As Tesla solidifies its leadership in autonomous vehicles and energy solutions, the prospect for long-term value creation remains strong.
Key Investment Factors
Growth Potential
Tesla's expansion into affordable EV models, alongside robust demand for energy products, presents significant growth opportunities. With plans to introduce cost-driven innovations, Tesla aims to capture a broader segment of the EV market.
Profitability Risk
Market risks include fluctuations in consumer demand impacted by economic conditions, competition pressures from both established automakers and new entrants in the EV space, and potential regulatory hurdles regarding autonomous vehicle deployments.
Financial Position
Tesla's strong cash position and relatively low debt levels afford financial flexibility for ongoing investments in technology and production, crucial for maintaining its competitive edge in the rapidly evolving automotive landscape.
SWOT Analysis
Strengths
Leading position in the EV market with ongoing demand growth.
Differentiated product offerings including energy solutions and advanced autonomous technologies.
Strong brand recognition and customer loyalty.
Operational efficiencies leading to record gross and net income.
Weaknesses
High dependency on the automotive segment for revenue.
Volatility in the stock price due to market perceptions and investor sentiment.
Challenges in scaling production to meet rapid growth targets.
Opportunities
Expanding into new markets by launching affordable EV models.
Increased installations of energy products as global energy demands shift towards sustainability.
Potential for software monetization through autonomous vehicle capabilities.
Threats
Intense competition from legacy automakers and new entrants in the EV market.
Regulatory challenges and consumer sentiment towards EV adoption.
Economic headwinds that can affect consumer purchasing power.