Tesla Inc. shares rallied more than 20% late Wednesday after the Silicon Valley electric-car maker reported a surprise quarterly profit and said key projects were ahead of schedule.
Tesla TSLA, -0.35% said it earned $143 million in the third quarter, or 80 cents a share, compared with $311 million, or $1.82 a share, in the year-ago quarter.
Adjusted for one-time items, Tesla earned $342 million, or $1.91 a share, compared with adjusted earnings of $3.02 a year ago.
Revenue fell to $6.30 billion from $6.82 billion in the year-ago period.
Analysts polled by FactSet expected an adjusted loss of 46 cents a share on sales of $6.43 billion for the quarter.
The stock soared past $300 in after-hours trading, having traded as low as $251.35 in the regular session.
The results were much better than expected, but Tesla has been there before, said Garrett Nelson, an analyst with CFRA.
“We think questions remain regarding the sustainability of these results, particularly as EV competition ramps up and its tax credit goes away,” he said.
Both the “gigafactory” in China and the Model Y, Tesla’s next vehicle, are “ahead of schedule,” the company said in a letter to shareholders.
Production of the Model Y, a compact SUV, is seen by summer of 2020. The Shanghai plant is “ready for production” and a “trial production” of the Model 3 there has started, Tesla said.
Investors had braced for a drop in sales despite an uptick for deliveries, mostly thanks to a mix of deliveries that skewed heavily toward the Model 3, Tesla’s cheapest vehicle.
Tesla moved to dispel some of the concerns about margins, saying that despite “reductions in the average selling price (ASP) of Model 3 as global mix stabilizes, our gross margins have strengthened” while expenses were at its lowest since the start of Model 3 production.
“As a result, we returned to GAAP profitability in Q3 while generating positive free cash flow. This was possible by removing substantial cost from our business,” the company said.
Tesla pinned the revenue miss on the percentage of leased vehicles, which has tripled, it said.
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Tesla also called for GAAP profits and free cash flow going forward with “possible temporary exceptions” around the launch and production ramp of new products. “Continuous volume growth, capacity expansion, and cash generation remain the main focus,” Tesla said.
The company earlier this month reported third-quarter deliveries, its proxy for sales, that fell short of expectations. Tesla said it delivered about 97,000 vehicles in the third quarter, including 79,600 Model 3 sedans. The car maker delivered 84,000 vehicles in the third quarter of 2018, including about 56,000 Model 3’s.
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Tesla said Wednesday it was “highly confident” in selling more than 360,000 vehicles in 2019. That will mean that it needs to deliver at least 105,000 vehicles in the fourth quarter. In the past, the company has spoken of selling between 360,000 and 400,000 vehicles in the year.
Earlier Wednesday, Ford Motor Co. reported third-quarter revenue and adjusted profit above Wall Street expectations, but lowered its outlook on increased headwinds in the fourth quarter, including lower volumes in China and higher-than-planned sales incentives in North America.
Tesla shares have lost about 23% this year, and 13% in the past 12 months. That contrasts with gains of 20% and 15% for the S&P 500 index SPX, +0.28% and the Dow Jones Industrial Average DJIA, +0.17% this year, respectively, and advances of 10% and 7% for the indexes in the past 12 months.
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