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Why Tesla Stock Jumped on Thursday

By Daniel Sparks – Oct 21, 2021 at 1:16PM

Key Points

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The electric car maker's soaring earnings in a difficult operating environment has investors cheering.

What happened

Shares of Tesla (TSLA 2.28%) jumped on Thursday. The growth stock was up 3.3% as of 12:50 p.m. EDT.

The stock's gain comes after the company reported better-than-expected third-quarter results, featuring non-GAAP (adjusted) earnings per share that more than doubled year over year.

Model Y interior

Model Y. Image source: Tesla.

So what

On Wednesday afternoon, Tesla said its revenue rose 57% year over year to $13.8 billion, driven by a 73% jump in vehicle deliveries. Adjusted earnings per share increased 145% year over year to a record $1.86. These results compare to analysts' consensus forecasts for revenue and adjusted earnings per share of $13.6 billion and $1.59, respectively.

The company's surging sales and robust financial results are particularly impressive considering the current challenging operating environment.

"A variety of challenges, including semiconductor shortages, congestion at ports and rolling blackouts, have been impacting our ability to keep factories running at full speed," Tesla said in its third-quarter shareholder letter. "We believe our supply chain, engineering and production teams have been dealing with these global challenges with ingenuity, agility and flexibility that is unparalleled in the automotive industry."

Now what

Importantly, Tesla reiterated its guidance for deliveries to grow at an average annualized rate of more than 50% over "a multi-year horizon." But management warned that its rate of growth will ultimately be dependent on "the successful introduction of many new product and manufacturing technologies in new locations, ongoing supply chain related challenges and regional permitting."

While Tesla didn't provide much insight into what to expect from vehicle deliveries in Q4, the automaker certainly seems on track to grow total deliveries this year at a rate that exceeds 50% growth over 2020. Management did say in the company's third-quarter earnings call that Tesla exited Q3 at an annualized production run rate of more than 1 million vehicles per year. "The increase in production rate has primarily been driven by further ramping of the Model Y at our Shanghai factory," said Tesla CFO Zach Kirkhorn.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.

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