Tesla Surges Following Big Q3 Earnings Beat, First Profitable Quarter In 2 Years

Shares of Tesla Inc TSLA rallied about 13 percent Tuesday as the company chose to announce earnings ahead of schedule.

Tesla on Wednesday reported quarterly earnings of $2.90 per share, beating the consensus of a 19-cent per-share loss. The automaker’s $6.82 billion in sales beat estimates of $6.3 billion.

Tesla last reported a profitable quarter in Q3 2016.

Q3 Highlights

Here are some other highlights:

• Free cash flow of $881 million, supported by operating cash flow of $1.4 billion.
• Operating income reached $417 million, with an operating margin of 6.1 percent.
• $3 billion cash equivalents at the end of Q3, compared to $731 million in Q3.
• The delivery of roughly 70,000 vehicles in the U.S.
• Energy storage deployments grew 118 percent compared to Q3 2017.

“Q3 2018 was a truly historic quarter for Tesla. Model 3 was the best-selling car in the US in terms of revenue and the 5th best-selling car in terms of volume. With average weekly Model 3 production through the quarter (excluding planned shutdowns) of roughly 4,300 units per week, we achieved GAAP net income of $312 million," the company's release said.

Q4 Guidance

Tesla plans to accelerate the manufacturing timeline in China, by expediting production to as early as 2019. Additionally, the company plans to increase the level of localization for sourcing and manufacturing.

Total operating expenses should grow slightly in Q4 and gross margin for the Model 3 should remain stable going into 2019.

“In Q4, we continue to expect to generate positive cash from operating cash flows net of capital expenditures, as well as the normal inflow of cash received from nonrecourse financing activities on leased vehicles and solar products.”

Tesla's stock surged more than 9 percent after hours to $315.13 per share at time of publication.

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