Tesla (NASDAQ:TSLA)’s latest quarterly results weren’t expected to be good based on sales trends and other aspects, but they turned out even worse than analysts had estimated. Nonetheless, the corporate’s stock price rose some 10% in pre-market trading on Wednesday following the discharge of its Q1 earnings results after the market closed on Tuesday.

Let’s take a more in-depth look to see what drove Teslaʻs stock higher following a disappointing quarterly report.

Tesla’s worst quarter in a decade

Tesla had perhaps its worst quarter in greater than a decade, as its revenue dropped 9% yr over yr to $21.3 billion. In keeping with multiple sources, it was the most important quarterly revenue drop since 2012. Further, Tesla’s revenue failed to satisfy the consensus analyst projection of $22.2 billion.

The automaker’s net income fell 55% to $1.1 billion or 34 cents per share, while its adjusted net income plunged 48% to $1.5 billion or 45 cents per share. Tesla’s adjusted earnings per share fell well in need of the projected estimate of 51 cents per share.

The subpar performance was not unexpected, as Tesla had previously reported a decline in deliveries within the quarter — the primary year-over-year drop since 2020.  

“Global EV sales proceed to be under pressure as many carmakers prioritize hybrids over EVs. While positive for our regulatory credits business, we prefer the industry to proceed pushing EV adoption, which is in-line with our mission,” Tesla management said within the earnings release.

The corporate reported a 9% decline in vehicle deliveries within the quarter to 386,810, while production fell 2% to 433,371 vehicles. The delivery decline was partly as a consequence of the Model 3 update within the Fremont factory and production disruptions on the Giga Berlin facility as a consequence of a hearth. A reduced average selling price (ASP) for Tesla’s vehicles also impacted its revenue.

With these aspects, the automaker’s earnings were hurt by rising operating expenses, which climbed 37% to $2.5 billion within the quarter. The jump in operating expenses was driven partly by investments in artificial intelligence, cell advancements and other R&D projects, and costs related to ramping up the Cybertruck.

What boosted Tesla stock?

If Tesla’s numbers over the past three months weren’t bad enough, the outlook for the remainder of 2024 shouldn’t be a lot better. Of their earnings presentation, management said the companyʻs vehicle volume growth rate could also be “notably lower than the expansion rate achieved in 2023.” They called it a lull between growth waves as the corporate prepares for the launch of its next generation of vehicles.

To that time, Tesla management said they’re accelerating the launch of recent, cheaper models. Initially, the plan was to start out production within the second half of 2025, but now the automaker is targeting late 2024 or early 2025, CEO Elon Musk said on the Q1 earnings call.

“These recent vehicles, including cheaper models, will utilize features of the next-generation platform in addition to features of our current platforms and can have the option to be produced on the identical manufacturing lines as our current vehicle line-up,” Tesla management stated.

The firm also said it intends to enhance efficiency and reduce expenses, which involves shedding 10% of its workforce or about 14,000 employees, in keeping with multiple reports last week.

Tesla Chief Financial Officer Vaibhav Taneja confirmed those plans on the Q1 earnings call, addressing the “hard but essential decision to cut back our head count by over 10%. The savings generated are expected to be well in excess of $1 billion on an annual run-rate basis.”

Tesla stock has tumbled about 35% yr to this point, and it’s as low cost because it has been in an extended time at 33 times earnings. The lower valuation, the accelerated plans for a recent, cheaper model, and the efficiency improvements can have convinced some investors to leap back into Tesla stock.

All of it sounds good, but investors ought to be patient and see how the automaker executes on these plans.