Tesla looks overseas after record third-quarter profit
- Author: Eleanor Harrison Oct 28, 2018,
Oct 28, 2018, 0:42
For the same period a year earlier, the company reported a loss of US$619 million.
The Californian carmaker posted a net income of $312 million (£243.4 million) in the third quarter of this year, which is the firm's first GAAP (generally accepted accounting principles) profit in two years. Last quarter, however, Model 3 sales pushed Tesla into the black.
Musk also has promised to be cash flow positive, and investors will watch whether its rocky delivery system is improving.
As far as revenue is concerned, Tesla during the quarter generated $6.8 billion in revenue, easily besting estimates from analysts on Wall Street. That level of popularity was a major factor behind the reversal of a major Tesla short-seller this month (short sellers bet that a stock's price will fall). "I am incredibly excited about what lies ahead".
Tesla's better-than-expected third-quarter results are reminiscent of the third quarter of 2016, in which transitory factors helped to drive positive earnings and cash flow, although those were not sustainable, and "is likely the same case now".
Ellison reportedly criticized media coverage of Musk, who has attracted controversy in recent months by making an unsupported accusation of pedophilia against a British diver who criticized him, smoking marijuana during an interview with Joe Rogan (recreational use is legal in California, where the interview was filmed), and tweeting about the possibility of taking Tesla private that led to a lawsuit from the Securities and Exchange Commission.
CEO Elon Musk will sabotage his own goals for the electric auto maker if he takes it private, said ARK Invest CEO Cathie Wood, who predicted Tesla stock could reach $4,000 per share. "Tesla has a lot of upside".
Musk called the results "historic", and praised the ingenuity and hard work of the company.
"The product I'm genuinely most excited about is the Tesla semi", he said without providing more insight about the new semi truck.
The DOJ's focus on Model 3 production had not previously been reported.
Tesla confounded critics on Wednesday by reporting in the third calendar quarter. First, they will begin shipping to Europe in the first quarter of next year, where the demand for midsize vehicles - electric or otherwise - is much larger than the U.S.
"Many of these elements, particularly mix, are peaky in nature, and will likely fade in the future, so the burden of proof remains on TSLA to generate core underlying earnings and cash flow absent peak factors", according to Bank of America Merrill Lynch.
At issue is whether Musk knowingly lied about the company's production capability to sway investors' opinions. Instead of hitting ~2500 cars per week in November (that's our eyeballed rate for that production point), the company hadn't even broken 1,000 vehicles per month. This is also the starting capacity, as the company plans to expand production to 500,000 vehicles before long.
"The story has become too compelling to ignore", Andrew Left of Citron research wrote on Friday. The WSJ notes that Tesla had stated in September that it responded voluntarily to requests from the DOJ for documents, but did not disclose that the documents might be related to its Model 3 ramp as opposed to Elon Musk's statements on Twitter that eventually led to a civil settlement with the SEC.