Tesla shares rise as analysts react to third-quarter results, Musk predicts

Tesla Shares rose about 19% Thursday morning, setting up the stock for its best day in more than three years after the company delivered a better-than-expected earnings report.

The company reported revenue of $25.18 billion late Wednesday, just below analysts' expectations of $25.37 billion but up 8% from a year ago. Tesla reported adjusted earnings per share of 72 cents, beating the average analyst estimate of 58 cents.

“We expect this surprise earnings beat to result in a strong positive reaction from Tesla shares on Thursday, given how accustomed investors have become to the company's earnings misses,” JPMorgan analysts wrote in a note.

Tesla's third-quarter profit margins were boosted by $739 million in auto regulatory loan revenue, which JPMorgan analysts called a “potentially unsustainable driver” of cash flow performance going forward.

Automakers must receive a certain amount of regulatory credit each year. If they can't reach the goal, they can buy loans from other companies. Tesla has excess credit because it only makes electric vehicles.

Tesla CEO Elon Musk said during a conference call Wednesday that his “best estimate” is that “vehicle growth” will reach 20% to 30% next year, citing “lower-cost vehicles” and the “emergence of autonomy.” “. Analysts polled by FactSet expected deliveries to grow about 15% in 2025.

Analysts at Morgan Stanley, who recommend buying the stock, called Musk's growth forecast for vehicle deliveries in 2025 “maybe.” They set their estimate at 14%.

It “clearly depends on the company's ability to improve affordability through the introduction of cheaper (next-generation) models, financing offers and improved features,” Morgan Stanley analysts wrote in a note on Thursday.

Tesla's rally on Thursday saw the stock recoup its annual loss and is now up nearly 2%, although it still lags the Nasdaq's 22% rise.

—CNBC's Lora Kolodny contributed to this report.

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