Tesla Motors surprises with Q3 profit

detroit — Electric car maker, Tesla Motors, posted its first quarterly profit in three years on Wednesday, giving investors reason to cheer after months of doubt.

Tesla’s shares have fallen since the summer as some investors questioned the company’s proposed merger with solar panel maker SolarCity Corp. Goldman Sachs recently downgraded Tesla’s shares from ‘buy’ to ‘neutral’ and lowered its price target, saying the potential merger could delay the release of Tesla’s much-anticipated Model 3.

But Tesla CEO, Elon Musk, said in a letter to investors that the third quarter showed Tesla could meet its goals while keeping one eye on opportunities for future growth. Musk also reiterated that Tesla shouldn’t need to raise cash to support the Model 3, and doesn’t expect a capital raise through the first quarter of next year. There had been some questions about the company’s ability to proceed without raising more money, but Tesla ended the quarter with positive free cash flow of $176 million.

“Things are looking good,” Musk said in a conference call with analysts and media. “It’s not to say there could be some darkness ahead... (but) it’s overall looking quite promising.”

Tesla reported net income of $21.9 million, or 14 cents per share, up from a loss of $229.9 million in last year’s July-September period. Revenue more than doubled to $2.3 billion. That included $149.7 million in non-automotive revenue — up 78 per cent from last year — in part because of growth in Tesla’s energy-storage business.

Tesla, which went public in 2010, has had only one other profitable quarter: the first quarter of 2013. But, the company said it expects to report net income in the fourth quarter of this year. The results surprised Wall Street, which forecast a loss of 86 cents, according to analysts polled by FactSet. Analysts had expected revenue of $2.2 billion. Tesla’s shares rose 4.5 per cent to $211.33 in afterhours trading.

Tesla delivered 24,821 vehicles during the quarter, an increase of 72 per cent over the same period last year.

The Palo Alto, Californiabased company said on Wednesday it still expects to deliver just under 80,000 vehicles worldwide this year, up from 50,500 in 2015.—