Tesla shares rocket after reporting unexpected Q3 profit
Tesla surprised the market on Wednesday with its third quarter net profit of $342.0m, which sent its stock flying over 18% in pre-market trading, but the manufacturer's top-line recorded its first decline for seven year, a development that some analysts labelled concerning and said left the long-term 'growth story' "less clear".
Nasdaq 100
20,394.13
12:15 15/11/24
Tesla Motors Inc
$320.72
13:09 15/11/24
Adjusted for one-time items, Tesla earned $1.91 a share (consensus: -$0.24), helped by a drop in operating expenses and a smaller than expected decline in gross margins on a GAAP basis from 22.3% to 18.9%.
That compared to adjusted earnings of $2.90 one year ago, even as its revenues fell by 7.6% to reach $6.30bn (consensus: $6.46bn).
"While we have long argued that deliveries growth could be at risk from a normal spike/burnout pattern of model launches, and that revenue growth could also come under pressure as lower-ASP Model 3 deliveries comprise a larger portion of the total, the relatively short period in which this turn occurred (2 years after Model 3 launch) is concerning [...]," said analysts at Bank of America-Merrill Lynch.
BofA-ML revised its target price for the electric carmaker's shares from $225 to $235 but kept its recommendation for the stock unchanged at
Tesla chief executive officer Elon Musk had vowed months before to return the company into the black, but analysts had been skeptical.
During the quarter, Tesla had worked to expand its sales overseas, including by investing in a manufacturing plant in China and expanding its production capacity in Europe.
"We have also dramatically improved the pace of execution and capital efficiency of new production lines," Tesla said in a letter to shareholders on Wednesday.
"Gigafactory Shanghai was built in 10 months and is ready for production, while it was [about] 65% less expensive to build than our Model 3 production system in the US."
On a call with analysts, Musk also that the Shanghai factory would "become a template for future growth."
The company delivered 97,000 cars last quarter, which was a tad short of the 100,000 mark that CEO Elon Musk had hoped to hit (BofA-ML: 105,300).
Tesla said Wednesday it was “highly confident” that it would sell over 360,000 vehicles in 2019, implying that it needed to deliver at least 105,000 vehicles in the fourth quarter.
Elon Musk also promised the launch in 2020 of a cheaper SUV and more self-control technology in a bid to stay ahead of new entrants in the market for electric vehicles.