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Tesla Stock Hits Record High, With $1 Trillion Valuation In Sight, After Q3 Earnings Surge

Tesla is now within clear sight of a $1 trillion valuation after shares in the group hit a fresh all-time high following record third quarter earnings earlier this week.

Tesla  (TSLA) - Get Free Report shares hit a fresh record high Friday, in the face of a downturn in broader tech stocks, as investors continue reward the clean-energy carmaker's record third quarter earnings. 

Tesla posted net income of just over $2 billion for the three months ending in September, alongside the strongest profit margins in the group's history -- 30.5% -- and record sales of $13.7 billion. The blowout figures followed another all-time high in third quarter deliveries, which rose 73.2% from last year to 241,300 units. 

CFO Zach Kirkhorn cautioned that plans to open and ramp-up production at new factories in Germany and Texas, as well as surging input costs and labor shortages, would impact margins in the coming quarters, but the group's ability to defy the global semiconductor shortage, while weaning its reliance on carbon credit sales to flatter its revenue line, has been truly impressive. 

 The clear highlight of the beat was margin strength, in our view, with Tesla posting both record auto gross margin and operating margin," said Oppenheimer analyst Dan Levy.

"Looking ahead, there may be some lumpiness as Berlin and Austin start ramping and also amid ongoing raw mat headwinds," he added. "However, the ongoing run of gross margin strength is encouraging, proving sustainable, and with future potential upside as Tesla starts to increase software revenue. And with improved gross margins, it reminds us of the lever Tesla has to push future pricedowns so as to spur volume increases."

Tesla shares were marked 1.5% higher on the session at $907.75 each, after earlier hitting an all-time high of $910.00 each, a move that would value the group at just over $900 billion.

Tesla noted in its earnings release that '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," although the group still managed to deliver a record 241,300 new cars over the three months ended in October.

"It's important to stress, while the first production car is an important milestone, the hardest work lies ahead in the ramp. Please keep in mind that we are pushing the boundaries on new product and manufacturing technologies at these factories, which makes it difficult to predict the exact pace of the ramp," Kirkhorn told investors on a conference call earlier this week. "These factories will also partially weigh on our margins as we work toward volume production."

Non-GAAP earnings were pegged at $1.86 per share, up 135% from the same period last year and well ahead of the Street consensus forecast of $1.59 per share.

Earlier this month, Tesla also unveiled plans to move its headquarters from California, its home for nearly two decades, to Texas, the site of its developing gigafactory and the home of SpaceX.

The decision, announced at the company's annual meeting in San Francisco, follows both Musk' personal move to the Lone Star State and a series of rows between the carmaking billionaire and the California authorities over issues including safety, taxes and COVID-19 precautions.

Musk also pledged to maintain the group's Freemont, California-based plant, adding he hoped to boost production there by 50% over the coming years.