Shares of Tesla Inc. (TSLA, Financial) surged over 8% in aftermarket trading on Wednesday on the back of the electric vehicle maker reporting a positive first-quarter GAAP net income for the first time in history despite operational challenges due to the coronavirus outbreak.
The Palo Alto, California-based company reported GAAP net income of $16 million, or 8 cents in diluted earnings per share, compared with net loss of $702 million, or $4.10 in diluted loss per share, in the prior-year quarter. Adjusted earnings of $1.24 per share outperformed the Refinitiv estimate of an adjusted loss of 36 cents per share.
Company accelerates year-over-year production and deliveries, boosting revenue
Tesla reported 88,496 deliveries during the quarter, up 40% from first-quarter 2019, driven by a 50% increase in Model 3/Y deliveries. Additionally, total production of 102,672 vehicles increased 33% year over year, including a 39% increase in Model 3 production.
The company said the first quarter of 2020 “was pacing to be the strongest quarter of deliveries” until the coronavirus shut down operations in March. Despite the shutdown, Tesla reported progress in its Gigafactory Shanghai ramp and Berlin-Brandenburg plant. Given such progress, management expects Model 3 production of approximately 4,000 vehicles per week.
The strong production and deliveries contributed to automotive revenue growth of 38% year over year and total revenue growth of 32% year over year. According to GuruFocus, Tesla’s three-year revenue growth rate of 42% outperforms over 97% of global competitors.
Gross margins remain strong
Tesla’s total gross margin of 20.6% increased 1.78% from fourth-quarter 2019 and 8.15% from first-quarter 2019, reflecting a 5% year-over-year increase in automotive gross margin, driven by strong volume growth in the company’s Gigafactory Shanghai ramp. Additionally, the company achieved positive gross margins for its Model Y vehicle in the first quarter of production.
Stock accelerates on earnings beat
Shares of Tesla increased over 8% on the company’s GAAP net profit, quelling concerns of its profitability. Gurus betting on Tesla staying profitable for the remainder of the year include Ron Baron (Trades, Portfolio)’s Baron Funds, Jim Simons (Trades, Portfolio)’ Renaissance Technologies and PRIMECAP Management (Trades, Portfolio).
Disclosure: No positions.
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