Tesla's financial report is shocking, with the stock price hitting its largest increase in a decade. Wall Street is debating the future market direction, will it drop nearly 40% or rise over 40%?

Tesla's strong profit increase in the third quarter shocked the market, with the stock price rising by 21.9% on Thursday after the financial report was released, marking the largest daily increase since May 2013. However, Wall Street institutions have divergent views on the future trend of Tesla's stock price after the financial report. Some are very optimistic, even predicting a price increase of over 40%, while others are more cautious, believing that Tesla has not yet addressed long-term growth concerns, and even predicting a future price drop of nearly 40%.

The optimistic side clearly includes staunch Tesla bulls and Wedbush analyst Dan Ives. He has given Tesla an outperform rating and set a target price of $300 for the next 12 months, which implies a 40.4% increase from Wednesday's closing price. Ives stated that the improved profit margin in the third quarter "clearly demonstrates that Tesla is focusing on profitability while balancing future plans."

Ives said:

"The days of discounting are clearly in the rearview mirror, in our opinion, and we view this as a key factor for Wall Street to prove profitability improvements as Tesla continues its AI/FSD transition over the next few years. After a tumultuous 2024, profitability has seen the much-needed boost, and bulls will be cheering this quarter."

Piper Sandler analyst Alexander Potter has given Tesla a neutral rating with a target price even higher than Ives, at $310, implying a 45% increase from Wednesday's closing price. Potter commented that Tesla's third-quarter report "performed well in almost every aspect unexpectedly," and even if the facts prove the company's own expectations to be optimistic, there is still "upside potential."

Canaccord Genuity analyst George Gianarikas raised Tesla's target price by $24 to $278, expecting a 30% increase from Wednesday's closing price. Gianarikas summarized Tesla's financial report as a "product cycle story of accelerating revenue and profit growth," mentioning some positives such as Tesla's announcement to start producing ultra-low-cost models next year and plans to produce approximately 2 million self-driving Robotaxi vehicles for the Cybercab business by 2026.

Truist Securities analyst William Stein maintained a hold rating for Tesla, slightly raising the target price expectation from $236 to $238, implying an increase of about 11.4% from Wednesday's closing price.

Stein believes that Tesla's profit growth benefited from strong profit margin performance, but also pointed out that Tesla did not provide detailed information on the 2025 models, improvements to the Full Self-Driving (FSD) system, or details about the humanoid robot project, Optimus The bearish representative is Ryan Brinkman, an analyst at Morgan Stanley. He emphasized that although investors may be excited about Tesla's extraordinary profit growth, the catalysts driving this surge in stock price should not be seen as long-term growth factors. He advised investors not to focus too much on the "explosive rise" in Tesla's stock price immediately after the financial report, believing that the market reaction brought by the performance report is "unsustainable".

Brinkman pointed out that Tesla's profitability and cash flow improved in the third quarter, but several factors behind these achievements are unsustainable. These include the so-called "carbon sales" revenue from selling carbon emission credits and abnormally high operating working capital gains.

Therefore, Brinkman maintained his underweight rating on Tesla. He raised Tesla's target price from $130 to $135, despite the 3.8% increase, the new target price is still 36.8% lower than Tesla's closing price on Wednesday, indicating that he expects Tesla's stock price to drop by nearly 37% from Wednesday's basis.

TD Cowen analyst Jeff Osborne gave Tesla a hold rating with a target price of $180. This target price implies a decrease of nearly 15.6% from Wednesday's closing price. Osborne noted that Tesla's third-quarter performance was driven by strong gross margins and mentioned that the company's new car releases are still expected to proceed smoothly in the first half of next year.

Wolfe Research analyst Emmanuel Rosner gave Tesla an industry-neutral rating, believing that two key factors are needed for Tesla's stock price to continue rising: confidence in accelerating growth in the automotive business and confidence in achieving fully autonomous driving. He also mentioned that Tesla's management showed great confidence in these two points during the third-quarter earnings call.

In addition, Adam Jonas, an analyst at Morgan Stanley, gave Tesla an overweight rating, with a target price of $310, the same as Potter's, believing that the third-quarter performance "may mark the bottoming out of automotive profit expectations". However, Wall Street News mentioned earlier that Jonas and other Morgan Stanley analysts raised doubts about whether the growth concerns have truly eased.

These analysts listed a series of market concerns that are still unresolved, including the direction of Tesla's capital expenditure growth, the proportion of AI in capital expenditure, and the payback period; Tesla's development path in autonomous driving, government certification, and insurance before launching fully autonomous driving technology in 2025; whether there will be any abnormal situations in the fourth quarter that could lead to unmet profit margin expectations; and where the expected growth of over 180% in energy storage systems in the fourth quarter will come from.

Mark Delaney and other analysts at Goldman Sachs raised Tesla's target price from $230 to $250, expecting the stock price to rise by 17% from Wednesday's closing. These analysts maintained a neutral rating on Tesla but expressed doubts about Tesla's ability to achieve FSD performance and vehicle delivery growth targets by 2025, as well as the sustainability of gross margins