Electric vehicle maker Tesla was seeing big gains after reporting earnings that revealed it was the company’s most profitable quarter ever in its history. Tesla shares had gained over 12% after the company reported the surprise profit in the third quarter.
According to CEO Elon Musk, it was an “incredibly historic quarter.” He also said, “We expect to again have positive net income and cash flow in Q4, and I believe — our aspirations, I think — will be for all quarters going forward. I think we can actually be positive cash flow for all quarters going forward, leaving aside quarters where we may need to do a significant repayment.”
For the quarter, Tesla reported adjusted earnings of $2.90 a share while analysts had expected a loss of 19 cents per share. Revenue at $6.82 billion was a jump of 70.5% and was much better than the $6.33 billion that was expected.
Several Wall Street experts had remarks on Tesla’s sensational quarter.
Nancy Tengler, chief investment officer at Heartland Financial, stated, “This a great beat, this is big, I think on revenue, on production. I’d like to see what the Model 3 looks like in terms of production, but it’s hard to justify the valuation when you compare it to Ford or GM. I get the technology, but I think at some point it comes down to valuation.” Tengler sold the stock at the end of 2017.
Nomura Instinet analyst Romit Shah commented, “I think the numbers are solid. If you think about the bear case just over the last year, Tesla can’t make the Model 3… there’s not enough for the Model 3… they can’t make money making the Model 3, and I don’t know what people who are bearish on this stock have left. The cash flow numbers and the balance sheet look really solid.” Last month Shah had downgraded the stock and said it was “no longer investable” citing Musk’s leadership.
Joe Osha, an analyst with JMP Securities said, “I’d like to hear about plans for making the Model 3 profitably, at lower price points, preferably $45,000 or below. And I’d like to hear about plans for continuing to address the liquidity situation. I think that’s pretty important, in particular if they do decide to try to build a plant in China next year. That could take some money as well. But I do think the numbers today are a validation of our longer-term thesis, which is that the company can continue to grow at a rate multiples of the industry, which is by the way why we are buyers of the stock despite it being more expensive than any other automotive company.”
Gene Munster of Loup Ventures also added, “It’s such a transformation. I liken back to… the year 1900. New York was basically entirely driven by horse and carriage. In 1907 it was almost entirely driven by automotive. When I think about that kind of transformation and the potential that Tesla has not only around autonomy… [Wednesday] on the conference call they were talking about competing with Uber and Lyft with a ride-sharing model. When I think about what they can do around electric and autonomy, I look the other way when it comes to valuation.”
In separate news, the Wall Street Journal has reported that the FBI is now reviewing Tesla’s Model 3 production numbers as it continues its criminal probe into whether Tesla misled investors.