Tesla Inc (NASDAQ:TSLA) stock vroomed 16% higher on the back of earnings that beat forecasts and with reassurance offered on profitability and mid-term growth.
UBS said the results were "one for the bulls" and highlighted that Elon Musk's electric vehicle company increased auto gross margins, excluding green credits, rose to 17.1% from 14.6% in the second quarter, supported by driving costs per vehicle to a record low.
Though without deferred FSD revenue, margins would have been 15.6%.
While the earning "should give bulls hope that Tesla is past the nadir on profitability and that (near- to mid-term) growth concerns are alleviated", the Swiss bank said, noting also that there was "plenty of fodder for the pivot from EV to AI narrative".
But analysts said that while they continue to be impressed with Tesla and the progress they are making on both robotaxi and humanoid robots, "valuing those ventures is particularly difficult, with many variables including probability of success and time".
Uber-bull analyst Dan Ives at Wedbush said Tesla "delivered an early Christmas present for investors as the bulls got a monster margin rebound and a surprisingly strong delivery outlook for 2025".
The major overhang on the Tesla story over the past year has been gross margins, said Ives, as a price war in China and softer EV demand globally has seen this metric go from the low 20% level to sub 15% in the June quarter.
He saw the highlight of the night was Tesla giving delivery growth for 2025 of 20%-30% versus whisper Street numbers in the 10%-12% heading into the print.
UBS maintained its price target of $197, based on 51 times expected 2026 earnings. Wedbush maintain its 'outperform' rating and $300 price target.