Tesla delivers profit for fifth straight qtr

THE FIRM’S GROSS AND OPERATING MARGINS ROSE TO MORE THAN 250 BPS AND 9.2% IN Q3

Tesla Inc. reported a fifth consecutive quarter of profits, handily beating analysts’ estimates, and said it remains on track to deliver 500,000 cars in 2020 despite weaker sales in the rest of the global auto industry.

The earnings streak could add momentum for Tesla’s inclusion in the S&P 500 Index and defies a downbeat trend among other automakers struggling to overcome a pandemic-induced slump.

The Palo Alto, Californiabased company reported thirdquarter profit of 76 cents a share on an adjusted basis, surpassing analysts’ consensus estimate for 55 cents a share.

Chief executive Elon Musk, who has not always enjoyed earnings calls with analysts, praised his management team and basked in the bullish results. “Q3 was our best quarter in history,” he said on a conference call Wednesday, ticking off a number of achievements, including production and delivery records and an all-time high free-cash flow.

Shares of the company are up 405% so far this year.

“What jumped out to me is gross margins,” said Gene Munster, managing partner at Loup Ventures. “That’s the machine that keeps the machine growing. They are making more money from each car.”

Tesla’s gross margins inched up more than 250 basis points in the quarter to 23.5%, while operating margins grew to 9.2% —even after Musk received $290 million for hitting compensation targets.

Tesla said it would meet its goal of delivering half a million cars worldwide this year, a target it wavered on after last quarter’s earnings and Musk last month hinted might not come to pass.