It is finally here: Tesla’s third-quarter earnings report for 2019. There is a whole lot of data available to dissect in the document itself, but there are a few highlights of the Tesla Q3 earnings report which should not be missed.
1. Big New for the Tesla Q3 Earnings Report: Profit!
After two periods of loss this year, Tesla has surprised everyone with its return to profitability in the third quarter. While Wall Street expected to see $6.42 billion in revenue and a loss of $0.46 per share (according to financial analyst FactSet), Tesla reported revenue of $6.3 billion and profits of $1.91 per share. Coming in just under revenue expectations and way over earnings expectations is not at all a bad thing.
When it comes to net income, Tesla brought in $143 million, or $0.80 per share. When adjusted for one-time items, Tesla earned $342 million in net income, or $1.91 per share. It also reported free cash flow of $371 million and a total cash balance of $5.3 million. Not only that, but the automaker also improved its automotive gross margins, an integral sign of financial health. This margin widened to 22.8 percent in the third quarter, up from 18.9 percent in the second quarter of 2019.
Tesla appears to be “highly confident” that it will be able to exceed 360,000 deliveries this year.
The great financial news sent Tesla stock soaring after the announcement, gaining as much as 17 percent in after-market trading.
2. Underpromising & Overdelivering
The Tesla Q3 earnings report also pointed out the fact that Tesla seems to have reined itself in from making too many lofty promises, which in turn makes its deliveries that much more impactful.
Preparations for the start of Model Y production are moving faster than originally planned. It looks like Tesla has learned a bit from the design of the Gigafactory 3 in Shanghai and is applying this experience to next year’s planned launch. Tesla has also officially moved up the production timetable for the Model Y, which should start in the summer of 2020 rather than in the fall.
The completion of the Gigafactory 3 is also ahead of schedule in terms of reaching production. Not only that, Tesla managed to build the factory in only ten months, has already begun trial production on-site, and built it for about 65 percent less capital expenditure per unit of manufacturing capacity than its Model 3-producing counterparts in the U.S.
3. Tesla Pickup Truck– Best Thing Ever?
When an analyst asked Tesla CEO Elon Musk about the upcoming Tesla pickup truck, Musk did not appear interested in providing a comment on the matter. He did, however, go on to say that the Tesla ‘Cybertruck’ (as he is now calling it) might be the electric car manufacturer’s “best product ever”.
Considering that Tesla already has three vehicles and several energy products under its belt, this seems like a bold claim. Kudos to Musk for his excitement over the pickup truck, and hopefully his enthusiasm is not unfounded.
4. Tesla Energy on the Upswing
It looks like Tesla may finally be doing something with its solar energy business. Its attempts to revamp Tesla Energy appear to have been successful, as the company deployed 43 MW of solar in Q3, which is 48 percent more than in Q2. This is likely in part because of Tesla’s new solar rental service and a new commercial solar online ordering platform.
Musk says that the company is going global and might eventually outgrow Tesla’s automotive business. More bold claims from an extremely confident man that we hope will actually come to pass.
5. Model S & Model X of “Minor Importance”
Musk made some surprising comments regarding the Tesla Model S and Model X during a call with investors regarding the financial report. Apparently he sees those models as “niche” products that are “really of minor importance to our future”. According to him, Tesla continues to manufacture the Model S and Model X more for “sentimental reasons” than anything else.
While the two models are expensive and sell at a much lower volume than the Model 3, they have still had a significant impact on the company’s financial health over the years. They might not be a part of Tesla’s long-term future, but it seems unlikely that they will disappear from production anytime soon.