Tesla profit blows away ex­pec­ta­tions fol­low­ing Model 3 break­through

Calgary Herald - - FINANCIAL POST - DANA HULL

Tesla Inc. posted only its third quar­terly profit ever and gen­er­ated more cash than ex­pected, bol­ster­ing Elon Musk’s bid to make sell­ing elec­tric cars a fi­nan­cially sus­tain­able busi­ness.

Ad­justed net in­come was US$2.90 a share, soundly beat­ing an­a­lysts’ aver­age es­ti­mate for a small loss, as the Model 3 quickly be­came one of the top-sell­ing sedans in the U.S. once the com­pany man­aged to re­solve a se­ries of pro­duc­tion bot­tle­necks.

Free cash flow was about US$881 mil­lion, a turn­about from the bil­lions of dol­lars Tesla was burn­ing on a quar­terly ba­sis while it was strug­gling to ramp up the Model 3. Even as de­liv­er­ies took off, Tesla man­aged to main­tain more than US$900 mil­lion in cus­tomer de­posits, show­ing that there’s still plenty of pent-up de­mand for the com­pany’s cars.

Tesla reaf­firmed its fore­cast for profit and pos­i­tive free cash flow in the fourth quar­ter, adding cred­i­bil­ity to its chief ex­ec­u­tive of­fi­cer’s pre­dic­tion a quar­ter ago that the com­pany will make those feats rou­tine go­ing for­ward.

Tesla shares surged as much as 11 per cent af­ter the close of reg­u­lar trad­ing Wednes­day.

It has eked out prof­its in the past in part thanks to sales of zero-emis­sion ve­hi­cle cred­its to other au­tomak­ers. This did help mat­ters last quar­ter, adding US$52.3 mil­lion in rev­enue, but the com­pany would have pulled off a profit re­gard­less.

DAVID ZALUBOWSKI/AP

Tesla’s Model 3 be­came one of the top-sell­ing sedans in the U.S., help­ing the elec­tric car brand earn an ad­justed net in­come of US$2.90 a share, beat­ing an­a­lysts’ aver­age es­ti­mate for a small loss. Tesla’s pos­i­tive re­sults and fore­cast adds cred­i­bil­ity to CEO Elon Musk’s bid to make elec­tric cars a vi­able busi­ness.

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