Electric automaker Tesla Inc (Nasdaq: TSLA) reported fiscal 2020 third-quarter revenues and earnings above Wall Street analysts’ estimates. The renewable energy company also issued an upbeat delivery forecast. In addition to record revenues for the fifth quarter in a row, the company posted record profits. Following the results, the stock rallied 0.75% or $3.15 to close at $425.79.
The Palo Alto, California-based company reported Q3 revenues of $8.771 billion, an increase of 39% from $6.303 billion in the similar period last year. Refinitiv analysts had anticipated the company to report revenues of $8.36 billion.
For the third quarter, the company posted earnings of $331 million or $0.27 per share, compared with earnings of $143 million or $0.16 per share last year.
Excluding charges, adjusted earnings for the quarter were $0.76 per share, compared to $0.37 per share in the prior-year period. Analysts surveyed by Refinitiv anticipated earnings of $0.57 per share for the quarter.
The company pointed out that revenue growth represents “substantial growth in vehicle deliveries as well as growth in other parts of the business.”
In the meantime, the average selling price of vehicles fell mildly as the product mix moved from Model S and Model X to the inexpensive Model 3 and Model Y.
Automotive revenues account for $7.60 billion, reflecting 91% of total revenue for the third quarter. Excluding regulatory credits, gross margins of the automobile division increased to 23.7%, from 18.7% on a sequential basis. Tesla made $397 million in regulatory credits during the third quarter, almost doubling the amount it generated from these “green” credits on a y-o-y basis.
In the third quarter, cash and cash equivalents rose by $5.90 billion to $14.50 billion, led primarily by capital raise of $5 billion in recent weeks (shares offered at an average price of $449) added to free cash flow of $1.40 billion and partly compensated by minimized use of credit lines related to working capital.
The company revealed that it had increased the production capacity of Model 3 / Model Y to 500,000 units per year in its Fremont facility.
In Shanghai, the company increased Model 3 production capacity to 250,000 units per year. Tesla slashed the price of Model 3 to 249,900 RMB (including incentives), turning it the cheapest premium mid-sized sedan in the country. Furthermore, the company has also added another (third) production shift to the Model 3 production factory.
During the quarter, Tesla delivered 124,318 Model 3/Y, an increase of 56% from the prior year. The deliveries increased by 55% on a q-o-q basis. However, Model S/X deliveries dropped 13% y-o-y. Still, it was 44% higher than the prior quarter. Likewise, solar deployed (MW) increased 111% on a q-o-q basis and 33% on a y-o-y basis. Storage deployed (MWh) rose by 81% on a q-o-q basis and 59% on a y-o-y basis. Overall, the energy storage business hit record deployments of 759 MWh in Q3.
Moving forward, Tesla stated that it aims to deliver half a million vehicles this year: “We have the capacity installed to produce and deliver 500,000 vehicles this year. While achieving this goal has become more difficult, delivering half a million vehicles in 2020 remains our target. Achieving this target depends primarily on a quarter over quarter increases in Model Y and Shanghai production, as well as further improvements in logistics and delivery efficiency at higher volume levels.”
The upbeat quarterly results are expected to keep the stock bullish in the short-term.
Technically, the stock is moving along the ascending trend line, as shown in the image below. The stochastic oscillator is also in the bullish zone. Therefore, we are anticipating the stock to remain in an uptrend in the near-term.
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