Tesla just reported a profit for the first time in three years
Tesla offered Wall Street a pleasant surprise on Wednesday: its first profitable quarter in more than three years.
Tesla snapped its 13-quarter losing streak with a slim third-quarter profit of $21.9 million on $2.3 billion revenue, a 145 percent increase from last year. That came as a bit of a surprise to Wall Street; this is only the second profitable quarter for Tesla in its 13-year history. Tesla shares rose more than 4 percent after hours.
One reason Wall Street was caught off guard is that Tesla had raised its car delivery estimates earlier this month to about 24,500, and today beat that revised estimate by an additional 300 cars (for a total of 24,821 cars delivered). Deliveries increased 114 percent in the third quarter from just 11,580 cars in the same period last year.
Tesla has been pressured by the Securities and Exchange Commission in recent months to change its accounting standards, and investors weren’t really sure how that would impact the company’s bottom line.
But the good news might not last for Tesla. Wall Street has soured on the company’s stock over the last couple months, and a number of investors are aggressively betting that Tesla’s stock price will fall significantly.
Their reasoning is that Tesla’s stock is overvalued, and that while Tesla may be better at delivering the cars it already sells, it will have a harder time competing with rival automakers in the future. Chevrolet’s $30,000 all-electric Bolt is landing in dealerships in January, and Tesla’s supply of federal incentives is running out, so its cars are about to get even more expensive for consumers. A current Model S starts at $66,000 and the coming Model 3 starts at $35,000, but production isn’t supposed to start until later next year.
On Friday, Tesla founder Elon Musk is scheduled to talk more about another one of the company’s big trouble spots: Tesla’s proposed merger with another Musk company, SolarCity. It’s likely that Wall Street will care more about what Musk says there than they do about Wednesday’s report.