The earnings streak could add momentum to the inclusion of Tesla in the S&P 500 index and define a downbeat trend among other vehicle drivers struggling to overcome an epidemic-induced recession. The Palo Alto, California-based company reported third-quarter profit of 76 cents a share on an adjusted basis, surpassing analysts’ consensus estimate of 55 cents per share.
Shares of the company rose 4.5% in Wednesday trading after closing at $ 422.64. The stock has risen 405% so far this year.
Tesla’s gross margin was over 250 basis points at 23.5% in the quarter, while operating margins increased to 9.2% – achieving $ 290 million to meet Alon Musk’s compensation goals.
“What jumped out for me is gross margin,” said Gene Munster, partner at Lupe Ventures. “It is the machine that keeps the machine going. They are making more money from each car. ”
Fourth quarter focus
Tesla said it would meet its target of delivering half a million cars worldwide this year, a target it missed after its previous quarterly earnings and last month’s CEO Musk indicated it would not pass Will happen. The company needs to supply more than 181,000 cars in the last three months of the year to hit that mark, which would be a 30% jump over the previous quarter.
“It has become even more difficult to achieve this goal, while our goal is to deliver half a million vehicles in 2020,” the company said in a statement. This will largely depend on increased production at its Shanghai factory and higher production of its Model Y, it said.
In January, before the onset of the coronavirus epidemic, Tesla predicted that it would “comfortably” deliver 500,000 vehicles for the full year, a 36% increase from 2019. Nevertheless, in a year the probability of the company increases in double digits. According to LMC Automotive, deliveries to the global auto industry are estimated to be 14% lower than pre-Kovid estimates and 22% lower than last year.
In addition to its main Model 3 sedan and Model Y crossover, the company also produces older and higher-priced Model X SUVs and Model S sports sedans. Its flagship factory in Fremont, California now has a capacity to produce 590,000 vehicles per year: 500,000 3 and Y and 90,000 S and X.
Tesla said that its semi-delivery would begin next year on Wednesday, four years after the big rigging was revealed.
Credit sales down
Tesla’s revenue improved from $ 8.8 billion, even as regulatory credit sales to other automakers fell to $ 397 million. This was down from $ 428 million in the second quarter.
“Regulatory credits are a big part of the EPS beat,” said Robert W. Baird analyst Ben Kallow. “But this is part of the game: Tesla’s competitors are paying them, and Tesla is rebuilding in its factories in Berlin and Texas.”
Electric-car manufacturers make money by selling credits to those manufacturers in California, Europe and elsewhere to comply with carbon-emission standards. Investors see this revenue as a double-edged sword because they want to know whether Tesla can benefit from its core business: making and selling cars.
When S&P failed to add Tesla to its index last month, Bloomberg Intelligence analyst Michael Dean said it “may be due to a question mark about the stability of regulatory emissions-credit sales, which currently reduce earnings” Has been doing.”
(Updates with third quarter earnings details from the third paragraph. An earlier version of this story was corrected to show that the company met its annual distribution target.)
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