Tesla (TSLA) reported earnings on Wed 24 Oct 2018 (a/h)

** charts before earnings **

 

** charts after earnings **

 

• the following day

Tesla surges following blow-out results: Profitability secured

Pretty much everyone thought Elon Musk was crazy when he guided for profitability in Q3 and Q4 but he handily delivered this afternoon. The company reported Q3 GAAP net income of $312 million, well above estimates for a ($169) million net loss and guidance for profitability. Free cash flow was $881M supported by operating cash flow of $1.4B.

Model 3 was the best-selling car in the US in terms of revenue and the 5th best-selling car in terms of volume.

The electric car maker announced an adjusted profit of $2.90 per share on revenue of $6.82 billion during its fiscal third quarter, blowing past the 3 cents per share loss and $6.052 billion in revenue expected in a consensus of analysts by FactSet.

In the same quarter a year ago, Tesla lost $2.92 per share on $2.985 billion in revenue.

Ramped-up production of the Model 3 paved the way for what Tesla Chief Executive Elon Musk vowed in an April tweet would be a profitable quarter. The company repeated that claim in its most recent letter to shareholders in August.

Tesla said it delivered 56,065 of the mid-size luxury vehicles to customers, or about 4,300 per week.

The Palo Alto, Calif.-based company reported $881 million in free cash flow, and $1.4 billion in operating cash flow.

Momentum had been growing in anticipation of the results, which were hastily announced late Monday, suggesting a good quarter was expected. The company usually sets the date for financial results weeks in advance, and its Q3 news typically comes in early November.

Longtime Tesla critic and short seller Andrew Left, who had nearly a five-year short position on the stock at Citron Research, reversed course on Tuesday, citing the success of the mid-size luxury Model 3 and the larger Model S.

“While the media has been focused on Elon Musk’s eccentric, outlandish and at times offensive behavior, it has failed to notice the legitimate disruption of the auto industry that is currently being DOMINATED by Tesla,” Left wrote in his note, which helped send Tesla shares up nearly 13% on Tuesday.

“TSLA is not just pulling customers from BMW and Mercedes but also from Toyota and Honda,” said Left, who sued Tesla, and Musk, alleging stock manipulation, last month.

Indeed, Tesla earlier this month said it produced 80,142 cars in the calendar third quarter—50% more than its previous high in Q2 and triple its production volume in the same quarter a year ago.

Still, short sellers and other Tesla skeptics aren’t completely sold the company has the long-term sales to justify its lofty stock value.

They point to the occasional Musk sideshow, culminating in his Aug. 7 tweet that he had funding to take the company private at $420 a share. This led to Musk giving up his chairmanship as part of a $40 million settlement with Securities and Exchange Commission. A subsequent stunt on a podcast, in which Musk apparently smoked a joint, didn’t help matters, or his image, in September.