- Tesla issued its Q3 earnings report earlier than expected this year.
- The report shows Tesla earned $6.82 billion in revenue vs. an expected $6.33 billion.
- Tesla's Q3 success is largely due to booming sales of the Model 3, the company's cheapest and newest car.
Tesla significantly outperformed Wall Street’s expectations in the third quarter of 2018, according to an earnings report released by the company on Wednesday. It was a “truly historic” quarter for Tesla, the report stated, thanks in large part to the success of the Model 3, the automaker’s newest and cheapest car.
“It is clear that customers are trading up their relatively cheaper vehicles to buy a Model 3 even though there is not yet a leasing option and the Q3 starting price of a Model 3 was $49,000,” a spokesperson told reporters on a phone call. “This leads us to believe that the total market potential for Model 3 is larger than just the premium sedan market.”
The report showed:
- Adjusted earnings: $2.90 a share vs. an expected loss of 19 cents per share, based on analysts’ estimates
- Revenue: $6.82 billion vs. an expected $6.33 billion
- An average production rate of about 4,300 Model 3s per week
- Free cash flow of $881M supported by operating cash flow of $1.4B
- GAAP net income of $312M, non-GAAP net income of $516M
- $3.0B of cash and cash equivalents at Q3-end, increased by $731M in Q3
Shares soared as much as 8 percent in after-hours trading following the report. The boost continues an upward trend that began Tuesday after one of Tesla’s most notable short sellers, Andrew Left of Citron Research, announced that he’s going long on the company.
“Citron has learned from our mistakes and sought to see what these shareholders find attractive — and we have,” Left wrote in a report, adding: “Tesla appears to be the only company that can actually produce and sell electric cars.”
A successful and tumultuous summer
Tesla may have beat Wall Street expectations and bested its skeptics in the third quarter, but it was by no means a smooth season for the company and its mercurial CEO Elon Musk.
In August, Musk caused controversy and legal problems by announcing that he was planning to take Tesla private when its stock hit $420.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
The Securities and Exchange Commission sued Musk in September for making “false and misleading” statements. In October, Musk settled with the commission under terms that included a $20 million fine and his agreeing to step down as chairman of Tesla for at least three years.
But despite recent stock price drops and a few surprising headlines involving Musk —like the British diver who’s suing the CEO for defamation, or Musk’s pot-smoking appearance on the Joe Rogan Experience — Tesla is steadily and increasingly becoming an undeniable force in the auto industry.
“Competition is nowhere to be found and no electric vehicle is slated to launch at the Model 3 price point until 2021,” Left, the former Tesla skeptic, wrote in a report this week. “Tesla is dominating the industry with no advertising, no unions, no dealer network.”