Investor's Corner
Tesla (TSLA) Q3 2023 earnings results: $23.5B in revenue and 17.9% gross margin
Tesla (NASDAQ:TSLA) posted its Q3 2023 earnings report after markets closed today. The results, which were discussed in the Q3 2023 Update Letter, were released after the closing bell on Wednesday, October 18, 2023.
Tesla’s earnings come on the heels of a quarter that saw a decline in production and deliveries, thanks in part to the rollout of the upgraded Model 3 in Gigafactory Shanghai. In the third quarter, Tesla produced 430,488 vehicles and delivered 435,059. Tesla also maintained its target volume of 1.8 million vehicles this 2023.
The following is a quick overview of Tesla’s Q3 2023 earnings results.
REVENUE
In the third quarter, Tesla posted revenues of $23.35 billion. In comparison, analysts expect Tesla to report a revenue of $23.9 billion in Q3 2023. Total revenue grew 9% YoY in Q3 despite the challenging quarter. As per the Q3 2023 Update Letter, Tesla’s third quarter revenues were affected by the company’s growth and increase in vehicle deliveries, as well as the reduced average selling price of its vehicles year-over-year.
EARNINGS PER SHARE
Tesla’s non-GAAP earnings per share for the first quarter of 2023 was listed at $0.66. In comparison, analysts were expecting Tesla to post an earnings per share of $0.72. GAAP earnings per share was at $0.53, which is also below the expected $0.64 per share.
-->PROFITABILITY
Tesla posted a 7.6% operating margin in Q3. The company also posted a $1.8 billion GAAP operating income, $1.9 billion GAAP net income, and $2.3 billion non-GAAP net income in Q3 in the third quarter. The fact that Tesla remained profitable this Q3 seems to be a testament to the strength of the company’s business.
Overall, operating income decreased year-over-year to $1.8 billion in the third quarter, resulting in a 7.6% operating margin.
CASH
Tesla’s quarter-end cash, cash equivalents, and investments increased sequentially by $3.0 billion to $26.1 billion in the third quarter. This was due to financing activities of $2.3 billion and free cash flow of $0.8 billion.
OTHER KEY UPDATES
- Tesla has more than doubled the size of its AI training compute to accommodate the company’s growing dataset and its Optimus humanoid robot program.
- First Tesla Cybertruck delivery event is set for November 30, 2023
- Gigafactory Texas’ Cybertruck capacity is at 125,000 units per year
- Gigafactory Shanghai’s annual output has been adjusted to over 950,000 vehicles
- FSD Beta’s cumulative miles has reached 525 million
- Tesla Energy deployments hit a record high of 4.0 GWh in Q3 2023
Below is Tesla’s Q3 2023 Update Letter.
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Investor's Corner
Mizuho keeps Tesla (TSLA) “Outperform” rating but lowers price target
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected.
Mizuho analyst Vijay Rakesh lowered Tesla’s (NASDAQ:TSLA) price target to $475 from $485, citing potential 2026 EV subsidy cuts in the U.S. and China that could pressure deliveries. The firm maintained its Outperform rating for the electric vehicle maker, however.
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected. The U.S. accounted for roughly 37% of Tesla’s third-quarter 2025 sales, while China represented about 34%, making both markets highly sensitive to policy shifts. Potential 50% cuts to Chinese subsidies and reduced U.S. incentives affected the firm’s outlook.
With those pressures factored in, the firm now expects Tesla to deliver 1.75 million vehicles in 2026 and 2 million in 2027, slightly below consensus estimates of 1.82 million and 2.15 million, respectively. The analyst was cautiously optimistic, as near-term pressure from subsidies is there, but the company’s long-term tech roadmap remains very compelling.
Despite the revised target, Mizuho remained optimistic on Tesla’s long-term technology roadmap. The firm highlighted three major growth drivers into 2027: the broader adoption of Full Self-Driving V14, the expansion of Tesla’s Robotaxi service, and the commercialization of Optimus, the company’s humanoid robot.
“We are lowering TSLA Ests/PT to $475 with Potential BEV headwinds in 2026E. We believe into 2026E, US (~37% of TSLA 3Q25 sales) EV subsidy cuts and China (34% of TSLA 3Q25 sales) potential 50% EV subsidy cuts could be a headwind to EV deliveries.
-->“We are now estimating TSLA deliveries for 2026/27E at 1.75M/2.00M (slightly below cons. 1.82M/2.15M). We see some LT drivers with FSD v14 adoption for autonomous, robotaxi launches, and humanoid robots into 2027 driving strength,” the analyst noted.
Tesla stock (NASDAQ: TSLA) has landed an elusive “must own” status from Wall Street firm Melius, according to a new note released early this week.
Analyst Rob Wertheimer said Tesla will lead the charge in world-changing tech, given the company’s focus on self-driving, autonomy, and Robotaxi. In a note to investors, Wertheimer said “the world is about to change, dramatically,” because of the advent of self-driving cars.
He looks at the industry and sees many potential players, but the firm says there will only be one true winner:
“Our point is not that Tesla is at risk, it’s that everybody else is.”
The major argument is that autonomy is nearing a tipping point where years of chipping away at the software and data needed to develop a sound, safe, and effective form of autonomous driving technology turn into an avalanche of progress.
Wertheimer believes autonomy is a $7 trillion sector,” and in the coming years, investors will see “hundreds of billions in value shift to Tesla.”
A lot of the major growth has to do with the all-too-common “butts in seats” strategy, as Wertheimer believes that only a fraction of people in the United States have ridden in a self-driving car. In Tesla’s regard, only “tens of thousands” have tried Tesla’s latest Full Self-Driving (Supervised) version, which is v14.
Tesla Full Self-Driving v14.2 – Full Review, the Good and the Bad
When it reaches a widespread rollout and more people are able to experience Tesla Full Self-Driving v14, he believes “it will shock most people.”
Citing things like Tesla’s massive data pool from its vehicles, as well as its shift to end-to-end neural nets in 2021 and 2022, as well as the upcoming AI5 chip, which will be put into a handful of vehicles next year, but will reach a wider rollout in 2027, Melius believes many investors are not aware of the pace of advancement in self-driving.
Tesla’s lead in its self-driving efforts is expanding, Wertheimer says. The company is making strategic choices on everything from hardware to software, manufacturing, and overall vehicle design. He says Tesla has left legacy automakers struggling to keep pace as they still rely on outdated architectures and fragmented supplier systems.
Tesla shares are up over 6 percent at 10:40 a.m. on the East Coast, trading at around $416.
Investor's Corner
Tesla analyst maintains $500 PT, says FSD drives better than humans now
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Tesla (NASDAQ:TSLA) received fresh support from Piper Sandler this week after analysts toured the Fremont Factory and tested the company’s latest Full Self-Driving software. The firm reaffirmed its $500 price target, stating that FSD V14 delivered a notably smooth robotaxi demonstration and may already perform at levels comparable to, if not better than, average human drivers.
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Analysts highlight autonomy progress
During more than 75 minutes of focused discussions, analysts reportedly focused on FSD v14’s updates. Piper Sandler’s team pointed to meaningful strides in perception, object handling, and overall ride smoothness during the robotaxi demo.
The visit also included discussions on updates to Tesla’s in-house chip initiatives, its Optimus program, and the growth of the company’s battery storage business. Analysts noted that Tesla continues refining cost structures and capital expenditure expectations, which are key elements in future margin recovery, as noted in a Yahoo Finance report.
Analyst Alexander Potter noted that “we think FSD is a truly impressive product that is (probably) already better at driving than the average American.” This conclusion was strengthened by what he described as a “flawless robotaxi ride to the hotel.”
-->Street targets diverge on TSLA
While Piper Sandler stands by its $500 target, it is not the highest estimate on the Street. Wedbush, for one, has a $600 per share price target for TSLA stock.
Other institutions have also weighed in on TSLA stock as of late. HSBC reiterated a Reduce rating with a $131 target, citing a gap between earnings fundamentals and the company’s market value. By contrast, TD Cowen maintained a Buy rating and a $509 target, pointing to strong autonomous driving demonstrations in Austin and the pace of software-driven improvements.
Stifel analysts also lifted their price target for Tesla to $508 per share over the company’s ongoing robotaxi and FSD programs.
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