Shares of Tesla Inc. (NASDAQ: TSLA) rocketed higher Wednesday evening after the electric car maker reported third-quarter earnings that were higher than expected. In doing so, the company announced it was ahead of schedule in rolling out its new production facility in Shanghai, China.
Q3 Earnings Summary
- Earnings: $1.86 per share
- Revenue: $6.3 billion
Tesla earned $1.86 per share on revenue of $6.3 billion during the third quarter, the company reported Wednesday after the bell. The surprise earnings beat came against expected losses of $0.42 per share. Analysts had called for revenue to come in at $6.33 billion.
To the surprise of investors, Tesla announced that its new Shanghai gigafactory will be operational earlier than expected. Built in just ten months, the facility was 65% less expensive to construct than the current Model 3 production system in the United States.
As CNBC reports, Tesla has been selling more lower-priced Model 3 cars in 2019, which has made up for a slight drop-off in the premium Model S and Model X vehicles.
“Despite reductions in the average selling price (ASP) of Model 3 as global mix stabilizes, our gross margins have strengthened,” the company said during the earnings call.
“We were able to make great strides in controlling our costs,” Elon Musk, Tesla’s chief executive, said in a call with analysts, as per The Wall Street Journal. “Our operating cost is now the lowest level since Model 3 production started.”
Automotive gross margins jumped to 22.8% during the quarter, up from 18.9% in Q2 but still below last year’s 25.8%.
Earlier this month, the company reported that Q3 was a record-breaking quarter in terms of vehicle production and delivery. Tesla produced 96,155 vehicles and delivered 97,000 in the three months ended September.
TSLA Stock Surges
After closing down 0.4% on Wednesday, Tesla’s share price surged more than 20% after-hours, eventually settling at $305.99. That puts the stock on for eight-month highs when regular trading resumes on Thursday.
At its lowest point this year, TSLA traded at $176.99, having declined 41% from the start of 2019.
At current values, Tesla has a total market capitalization of $45.6 billion.
Despite posting surprise profits last quarter, Tesla faces obstacles in the form of increased competition, management issues and uneven quarterly earnings. In an effort to boost liquidity, the company earlier this year raised $2.35 billion through a combination of debt and stock. It raised $750 million in common shares and $1.6 billion from convertible bonds.
Disclaimer: Author holds no investment position in Tesla at the time of writing.
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