3 reasons to buy Tesla shares like there’s no tomorrow

Tesla (TSLA 18.51%) shares opened higher on Thursday following a better-than-expected quarterly report. Critics will point out that an already overvalued stock is now even more valued. People upset with Elon Musk’s political antics will argue that the gains cannot last for a divisive and mercurial CEO.

However, Tesla has traded higher – much higher – than it is now for quite a period of time. There was also plenty of meat in Wednesday afternoon’s financial update to encourage an optimistic long-term mindset for the country that has made electric cars viable and ambitious. Let’s look at some of the reasons why now might be a good time to buy Tesla stock like there’s no tomorrow.

1. Profitability is growing faster than revenue

Revenue rising 8% to $25.2 billion in the three months ending in September isn’t necessarily impressive. Investors already knew that vehicle deliveries for the quarter were pre-announced as a 6% year-over-year increase. Average selling prices are falling, but given Tesla’s ecosystem of subscriptions, accessories, and Supercharger outposts, it’s easy to see why revenue is more than just the initial sale.

Boo Birds will point out that Tesla is experiencing unsustainable momentum from selling regulatory credits to automakers. There are also growing results from the automaker’s energy generation and storage business. It still doesn’t take away from its extraordinary performance on the bottom line.

Net profit soared 17% to $2.2 billion in the quarter, more than doubling its net income. Tesla has slashed prices on everything from its cars to subscriptions to its autonomous driving platform. Its operating margin was still 10.8%, well above the 7.6% recorded a year earlier. The bottom line now is finding a way to shine.

This is Tesla’s strongest revenue growth in a year, and the first time margins have increased and profits have outpaced revenue in more than a year. It was a refreshingly optimistic report.

Image source: Getty Images.

2. Autonomous driving is worth a premium

There’s no shortage of video clips online showing Tesla’s worst Full-Self Driving platform. It was released a few years ago in beta. There will be mistakes. However, the signature platform that automates the driving experience continues to improve with each update.

Tesla points out that the ratio of miles to interventions – or how many times someone has to take control for something that is missing from the car – is getting better and better. It is now statistically less likely for an accident to happen on Autopilot than with a human at the wheel. It may never be perfect, but it’s a win if it’s safer than the owner behind the wheel.

Give it time. Market reaction was muted earlier this month when Tesla unveiled its cybertaxi and robovan. They’re still a few years away from hitting the road, and when they do, you can assume the guts powering fully autonomous transportation will be even better. Tesla believes the two-seat cyber taxi will provide an even cheaper transportation option than mass public transportation.

3. Musk says Tesla shares will be much higher