Tesla Inc. TSLA, a major electric vehicle manufacturer, said the September quarter represented a “historic” quarter highlighted by strong Model 3 production and sales.
The Palo Alto, California-based company reported adjusted net income of $516 million, or $2.90 per share, outperforming the consensus estimate by approximately $3.10 per share.
Company accelerates Model 3 sales and gross margins during the quarter
Tesla CEO Elon Musk said automobile revenues of $6.098 billion increased 82% from that of the second quarter, driven primarily by a sharp increase in deliveries of its Model 3, “the best-selling car in the U.S. in terms of revenue and the fifth best-selling car in terms of volume.” The company delivered nearly 90,000 vehicles globally, including 56,065 Model 3s and 27,710 Model S and X vehicles. Model 3 gross margins exceeded 20% on several factors, including higher selling prices and “significant reductions in manufacturing costs.”
The electric vehicle manufacturer said it would expand its Model 3 market to Europe and Asia to “significantly increase” the car’s affordability. Musk commented on the strong reception at the Paris Auto Show and the Goodwood Festival of Speed. The CEO also decided to accelerate Tesla’s manufacturing timeline in China and progressively increase localization levels. Tesla expects to begin taking Model 3 orders in Europe and China by the end of 2019.
Musk also underscored one key improvement in Tesla’s “direct delivery” service, resulting in the company's U.S. days sales outstanding outperforming that of rival automobile companies like Daimler AG’s XTER:DAI Mercedes Benz, Bayerische Motoren Werke AG XTER:BMW and Audi AG AUDVFXTER:NSU. Tesla’s days sales outstanding reached a two-year low during the quarter.
Shares rise on strong fourth-quarter outlook following "go-private" saga
Shares of Tesla rose over 12% in after-market trading on solid fourth-quarter guidance, which includes stable Model 3 gross margins and a strong cash position.
On Sept. 30, Musk said “deal” to an offer from the Securities and Exchange Commission that requires the CEO to rescind his role as chairman for three years and pay civil penalties of $40 million, $20 million each from Musk and the company itself. The SEC reached a final judgment on Musk’s “go-private” saga on Oct. 16, where the CEO will appoint an independent director to replace him as chairman within 45 days of the settlement filing and appoint two additional directors to the Tesla board within 90 days of the settlement filing.
Musk reaffirmed Tesla’s expectations of continued net income and free cash flow during the fourth quarter, with the company’s $3 billion cash position remaining strong despite repaying $230 million of debt using cash.
Gurus cheering on Tesla’s strong results include Spiros Segalas (Trades, Portfolio) and Ron Baron (Trades, Portfolio). Segalas boosted his Tesla position 45.12% during the quarter, adding 544,356 shares for an average price of $312.76 per share.
Disclosure: No positions.
Read more here:
