Tesla shares soared roughly 19% on Thursday morning, placing the inventory on tempo for its greatest day in additional than three years, following the corporate’s better-than-expected earnings report.

The corporate late Wednesday reported income of $25.18 billion, which got here in just below analysts’ expectations of $25.37 billion, however was up 8% in comparison with a 12 months earlier. Tesla reported earnings per share of 72 cents adjusted, topping the common analyst estimate of 58 cents.

“We anticipate this shocking earnings beat to energy a powerful constructive response in Tesla shares Thursday, given the diploma to which traders have develop into conditioned to earnings misses from the corporate,” analysts at JPMorgan wrote in a be aware.

Tesla’s revenue margins within the third quarter have been boosted by $739 million in income for automotive regulatory credit score, which the JPMorgan analysts famous as a “doubtlessly unsustainable driver” of money stream efficiency for the long run.

Automakers are required to acquire a specific amount of regulatory credit yearly, and if they can not meet the goal, they’ll purchase credit from different firms. Tesla has extra credit as a result of it solely makes electrical autos.

Tesla CEO Elon Musk mentioned throughout an earnings name Wednesday that his “greatest guess” is that “automobile progress” will attain 20% to 30% subsequent 12 months, citing “decrease value autos” and the “introduction of autonomy.” Analysts surveyed by FactSet have been anticipating supply progress of about 15% for 2025.

Analysts at Morgan Stanley who advocate shopping for the inventory, referred to as Musk’s 2025 automobile supply progress prediction a “perhaps.” They set their estimate at 14%.

It “clearly is determined by the corporate’s capacity to enhance affordability via cheaper mannequin (subsequent gen) introduction, financing affords and improved options,” the Morgan Stanley analysts wrote in a be aware on Thursday.

With Tesla’s rally on Thursday, the inventory erased its loss for the 12 months and is now up nearly 2%, although it nonetheless trails the 22% acquire for the Nasdaq.

— CNBC’s Lora Kolodny contributed to this report.

WATCH: Tesla’s worth battle is over