Tesla tops Q3 estimates, targets 500K deliveries by end of 2020 - Yahoo Finance

Tesla shares are up in after hour trading following a third-quarter earnings report that beat expectations. The electric car manufacturer reported $8.77 billion in revenue, compared to the Street's estimate of $8.26 billion, while posting its fifth straight quarter of net profit. The company reiterated its guidance to achieve a record half-million vehicle deliveries by year's end. Jared Blikre breaks down the results on The Final Round.

Video Transcript

SEANA SMITH: We need to get to some breaking news here after hours. Tesla is out with its earnings report. Shares here getting a boost here in the after hours trading, up just around 3%. Jared Blikre has those numbers for us. Jared.

JARED BLIKRE: Seana, this stock is up about 2% in-- actually, 3 and 1/2% now, climbing as we speak. And it was a beat on both the top and bottom line. So here is the top line. Third quarter revenue came in at $8.77 billion. The estimate was for a bit lower at $8.26 billion.

Third quarter adjusted EPS, $0.76, versus estimates of $0.55. And also saying in a statement, they have sufficient liquidity to fund their product roadmap. We know they're going to be laying out a lot of money in some of their new gigafactories, especially Germany. Also saying that Berlin, Shanghai deliveries are on track for their 2021 start.

In terms of free cash flow, that came in at $1.40 billion versus $418 million last quarter. Estimate was for even lower than that-- $1.1 billion. So, nice beat in free cash flow as well.

Just looking for some other stats here. They're also saying that they want to deliver 500,000 vehicles in 2020. That remains the target. And we already knew that they just came off a record delivery for the third quarter. Again, the stock just climbing here even more. It's up over 4% in after hours trading, Seana.

SEANA SMITH: Rick, the big thing here, what Jared was just talking about and I think the big focus going into this report, was whether or not Tesla was going to maintain that 500,000 forecast here for deliveries by the end of the year. Tesla, in fact, did maintain that. And that, of course, could be one of the big reasons why we're seeing such a reaction here after hours, with the stock up just over 3%, like Jared was saying.

RICK NEWMAN: Yeah, that was considered a stretch goal, 500,000 units for the calendar year in 2020. They're saying they're still going for it. That doesn't mean they're going to get it. So we'll have to see how Elon Musk kind of handles expectations there.

Another thing I think is probably pushing this stock up is their automotive gross margin. So this kind of tells you how they're doing on profits on building cars. And it factors out those pollution credits that they sell. So that actually went up. In the prior quarter, their automotive gross margin was 18.7%. That was a slip.

Some analysts from the prior quarter and some analysts had said watch that number and see if it slips again. It did not slip. It went up. So automotive gross margin up from 18.7% last quarter to 23.7% this quarter, which means their automotive operation on its own is increasingly profitable. So I think that's for sure one of the things pushing the stock up right now.

ANDY SERWER: Yeah, and, you know, Rick, when we talk about, and Seana, we talk about that half a million number for cars that they are targeting to make this year over the next 12 months, just to give that some perspective, Toyota makes about 833,000 cars a month, right, about 10 million a year-- 10 million.

I think GM makes about 7.7, Rick, something like that. So but again, this is where all the growth is, where all the action is. And ask yourself, if you're an investor, with all apologies to Mary Barra, you know, what horse would you bet on, going forward? Now that's saying nothing about the price. I'm just saying about the horse.

RICK NEWMAN: Yeah, I think the 500,000-- I mean, the number itself doesn't matter. I think it matters because that's the target that Elon Musk himself has put out there. So the question is, can Tesla meet the targets that it sets for itself?

And by the way, if it can grow at any pace while maintaining profitability, I mean, the other big thing for Tesla is whether it can actually be profitable for the full year. So they've got five quarters of profitability in a row, but not four in the same year. So fourth quarter would be the fourth quarter of profitability.

So they probably will end up being profitable for the year, even if they're not profitable in the fourth quarter, which should be the first time they've done that on an annual basis. So again, the bottom line for Tesla is they're stabilizing production. And they are probably stabilizing their finances and becoming a little bit more mature of a company.

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Tesla tops Q3 estimates, targets 500K deliveries by end of 2020 - Yahoo Finance
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