Tesla gives industry a big surprise: profitable Q3Tesla Motors Inc. surprised investors with its first profit in eight quarters after Chief Executive Officer Elon Musk urged employees to cut costs and deliver every car they could to boost results and prove Wall Street skeptics wrong.
The electric car maker’s shares rose about 4 percent in late trading after it posted third-quarter profit excluding some items of 71 cents a share, instead of the average 54-cent loss projected in a survey of seven analysts. Forecasters had hustled in recent days to adapt their models as Tesla hewed closer to GAAP reporting methods.
“This was a great three months for the company,” said Joe Dennison, associate portfolio manager at Seattle-based Zevenbergen Capital Investments LLC, which owns 584,000 shares of Tesla. “Despite daily headlines and skepticism, Tesla continues to widen its technology lead and make steady progress towards its goals of mass production.”
The results provide some vindication for Musk, who tempered Tesla’s cash burn ahead of a Nov. 17 shareholders vote on a proposed merger with SolarCity Corp. That deal has drawn criticism as a potential distraction as Tesla spends heavily to prepare its California factory for the high-volume Model 3 car and build out its Gigafactory battery plant in Nevada. In a letter to shareholders, Musk today lowered the expected spending on capital expenditures for 2016 to $1.8 billion, from $2.25 billion last quarter, to “focus on capital efficiency.”
“We were able to have our best quarter ever and achieve full GAAP profitability,” said Musk on a conference call with analysts. “It’s definitely one of the best moments ever in Tesla.”
The Palo Alto, California-based company also maintained its forecast for 50,000 vehicles delivered in this year’s second half, after shipping 24,800 Model S sedans and Model X sport utility vehicles in the quarter, more than analysts had estimated.
In an Aug. 29 email, Musk told employees the third quarter would be their last chance to show investors that Tesla could be at least a little profitable before the Model 3 ramps up production. Bloomberg