Tesla Stock Soars After Surprise 3Q Profit (TSLA)

After two periods of losses, the automaker surprises Wall Street with a profitable third quarter

Tesla Stock - TSLA

Tesla’s stock (NASDAQ:TSLA) soared on Thursday after the electric car-maker turned in an unexpectedly profitable third-quarter.

The company said it earned $143 million, or $0.80 a share, defying analysts’ expectations for an adjusted loss of $0.46 a share. When adjusted for one-time items, Tesla earned $342 million, or $1.91 a share, in the third quarter. Revenue came in at $6.3 billion. Analysts had expected revenue of $6.43 billion, according to data compiled by FactSet.

Tesla also posted much higher than expected free cash flow (operating cash flow less capex) in Q3, at $371 million. At the same time, it said, cash and cash equivalents stood at $5.3 billion, an increase of $383 million. The company attributed the surge in profit to a “substantial” cost-cutting in its operations — so much that earnings per share rose even though revenue fell slightly.

“Execution was outstanding on just about every front,” Tesla’s chief executive, Elon Musk, said in a conference call with Wall Street analysts. In its earnings report, Tesla stated that it continues to believe that its “business has grown to the point of being self-funding.”

The report, which marked a reversal from several consecutive quarters of losses, contained also a number of positive signs for the Palo Alto, Calif.-based car-maker. Tesla said its Gigafactory in Shanghai is ahead of schedule and trial production has started. It also noted that the Model Y crossover is ahead of schedule and that production is expected to begin by mid-2020.

Another important highlight from the third quarter includes deliveries. Tesla sees them as increasing sequentially and annually, with some expected fluctuations from seasonality. “We are highly confident in exceeding 360,000 deliveries this year”, the company said.

“Skeptics had legitimate concerns in the past, but Tesla is now building cash, winning market share, and boosting margins – all while preparing to launch products in untapped segments and regions,” Piper Jaffray’s Alexander Potter, who has an overweight rating and $372 TSLA price target, said in a note to investors after a quarter of record deliveries and cost cuts.

Tesla Stock Price Action

Tesla shares, which have plunged more than 33% since hitting a 52-week high of $379.49, putting the stock in correction territory, were trading higher by 43 points at $301 & change at the time of publication Thursday. CNBC notes that if the spike holds through today’s trading, it would be Tesla’s best single day of trading since May 2013.

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