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Electric vehicle and storage company Tesla reported a surprise profit for the third quarter after the close Wednesday sending $TSLA up over 20% on short coveringe. Tesla also said it was ahead of schedule with a new factory in Shanghai.

Tesla Model 3 Tesla Model 3

Tesla Inc. (NASDAQ: $TSLA) Reported Earnings After Close Wednesday

$1.86 Beat $(0.42) EPS and $6.3 billion Missed $6.33 billion forecast in revenue

Earnings

Tesla Inc. ($TSLA) reported third-quarter adjusted earnings per share of $1.86 vs an expected losses of 42 cents per share. Revenue was $6.3 billion vs. expected $6.33 billion, according to Refinitiv consensus estimates. Revenues dropped 8% annually hurt by softness in vehicle shipments. The top line came in broadly in line with the market’s expectations. Last quarter, Tesla shares dropped after the company reported losses of $1.12 per share and $6.35 billion in revenue.

Tesla Inc NASDAQ: TSLA

Market Reaction > After hours $306.00 +51.32 (+20.15%)

Highlights

  • “Gigafactory Shanghai was built in 10 months and is ready for production, while it was ~65% less expensive (capex per unit of capacity) to build than our Model 3 production system in the US.”
  • Tesla Q3 2019 Update In Q3, Tesla released over-the-air software updates, including a controversial Smart Summon feature, that lets some Tesla drivers use an app to remotely call and control their cars. The cars can, in some situations, come pick them up from a short distance away, navigating a parking lot without any driver behind the wheel to do so.
  • Tesla launched new Autopilot software upgrades which enabled the company to recognize deferred revenues. The company has been selling more, lower-priced Model 3 vehicles in 2019, and fewer of its higher-priced Model S and Model X’s.
  • “Despite reductions in the average selling price (ASP) of Model 3 as global mix stabilizes, our gross margins have strengthened.”
  • Specifically, automotive gross margins for Tesla rose to 22.8% in the third quarter, up from Q2 auto gross margins of 18.9%, but still less than the 25.8% automotive gross margins
  • Tesla reported during the third quarter last year.Tesla’s energy segment achieved record storage deployment of 477 Mwh, with a 48% sequential solar growth.
  • Tesla said that margins were improved in part through “Smart Summon-related deferred revenue recognition, FX and other non-recurring items.”
  • It did not specify what the non-recurring items were.
  • Tesla CFO Zach Kirkhorn said on an earnings call on Wednesday afternoon that the company recognized $30 million in revenue related to the Smart Summon update.

Tesla Q3 2019 Earnings

Earlier, there was caution among the stakeholders after the company reported third-quarter production numbers that fell short of expectations, despite year-over-year growth. It produced 96,155 vehicles and delivered around 97,000 units, led by the Model 3 sedan, as usual. Tesla’s stock suffered this year due to its inability to meet the production targets.

Today’s third-quarter earnings report is the first for Tesla since the departure of co-founder and former CTO JB Straubel, and since the company completed the acquisition of two companies

China

In its Q3 2019 Update, Tesla said: “Gigafactory Shanghai was built in 10 months and is ready for production, while it was ~65% less expensive (capex per unit of capacity) to build than our Model 3 production system in the US.” Tesla is aiming for a start of production of the Model 3 in China by the end of the year, which will allow it to benefit from lower costs to deliver to customers there, while reaping the rewards of local regulatory credits.  Tesla management said it is on track to launch the Gigafactory in Shanghai, China, by the end of 2019 and roll out Model Y by the fall of 2020. 

 

Source: Tesla. AlphaStreet

From The TradersCommunity News Desk

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