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Catching Wall Street Off Guard, Tesla Turns A Profit, Beats Q3 Estimates

Catching Wall Street Off Guard, Tesla Turns A Profit, Beats Q3 Estimates

Can Tesla Inc. (NASDAQ: TSLA) turn a profit? That was the burning question seared into the brains of investors awaiting the electric car (and truck, lest we forget) maker's Q3 earnings report. 

The answer, apparently, is yes it can. Tesla posted $1.91 adjusted profit per share on Wednesday, beating Wall Street estimates of $-0.24 per share.

Its gross margin clocked in at 18.9%, versus estimates of 17.7% .

In its shareholder letter, the company said it expects "positive quarterly free cash flow going forward, with possible temporary exceptions."

Marking a sour note, third quarter revenue declined, registering $6.30 billion, down from estimates of $6.42 billion and $6.35 billion in the second quarter of 2019.

In the letter, Tesla explained the losses: "Compared to the third quarter of 2018, the percentage of leased vehicles has tripled and alone has impacted revenue by the majority of the year-over-year decrease."

Revenues for the third quarter of 2018 were $6.824 billion.

The results were a vindication for Musk, who has been much derided for not delivering on his financial promises – or vehicles.

Analysts' naysayer estimates were based on a vehicle and production and delivery update earlier this month that missed Musk's internal goals. 

Tesla delivered 79,600 Model 3 cars, and 17,400 of its higher-priced Model S and X vehicles during the third quarter. Musk had set a goal of 100,000 plus deliveries for the quarter.

In the letter, Tesla credited the rosier financial outlook to improved operating expenses, now at the lowest level since production of the Model started. Efficiencies included reductions in manufacturing and material costs and continued improvements in vehicle quality 

Tesla also told shareholders construction on its new Model 3 factory in Shanghai is ahead of schedule, as is start-of-production for its crossover SUV at its main plant in Fremont, California. 

After missing several delivery targets, Tesla now says it expects to bring the Tesla Semi electric truck to production at the end of 2020.

Shares of Tesla rose as much as 12% in after-hours trading following the release.  

An earnings call is scheduled for 3:30 p.m. Pacific Daylight Time. Check back for updates.

Image Sourced from Pixabay. Credit: Blomst

Posted-In: Freight Freightwaves Q3 earnings resultsEarnings News Markets Tech General


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