Tesla Shares Explode on Third Quarter Earnings Beat

Shares of electric vehicle maker Tesla were on fire this week after the company smashed in its third quarter financial results.

Tesla soared over 20% in after-hours trading on Wednesday on the report that revealed a surprise profit. The company also revealed that it was ahead of schedule with its new factory in Shanghai.

Share prices were at their highest since February on Wednesday as Wall Street digested the report.

For the third quarter, Tesla reported adjusted earnings per share of $1.86 compared the loss of 42 cents a share that was expected. Revenue at $6.3 billion was only slightly behind the $6.33 billion that was expected according to consensus estimates from Refinitiv.

Tesla also released a 28-page investor update filled with photos from its new factory in Shanghai and said that it is ahead of schedule with the Model Y crossover that is expected to launch by summer 2020.

“Gigafactory Shanghai was built in 10 months and is ready for production, while it was ~65% less expensive (capex per unit of capacity) to build than our Model 3 production system in the US.”

CEO Elon Musk said on the earnings call, “Q3 was obviously a very strong quarter and we had record deliveries, we’re able to make great strides and controlling our costs. We shifted back to GAAP profitability while also generating strong free cash flow. And again, this would not be possible without each employee doing their part to reduce cost. Our operating cost is now at the lowest level since Model 3 production started.”

He continued, “Regarding Gigafactory, Shanghai, this month we started with trial production at Giga Shanghai and built four [Phonetic] vehicles from body, to paint, to general assembly. So this is a — more emphasis this is [Phonetic] a real factory with a tremendous amount of equipment in it. While a lot of people see the outside show the factory, which is enormous, and it was essentially under water in January. It was below the water table literally. What is, I think, much more significant is that we’re able to install massive stamping machines, fully operational paint shop and a sophisticated general assembly line in the same period of time, in parallel with bogue building I’d like to thank our transient for this extraordinary achievement I’m not aware of any factory of this magnitude in history being constructed in such a short period of time, approximately 10 months. As far as I know, this is unprecedented. And Gigafactory Shanghai will become a template for future growth. We’re planning to build model-wise in Shanghai as well of course, and build a Gigafactory in Europe and we hope to announce the location to that Gigafactory. In fact, we will announce the location to that Gigafactory before the end of this year.”

He also said, “Regarding Model Y, we’re also ahead of schedule on Model Y preparations in Fremont, and we’ve moved the launch timeline from full 2020 to summer 2020. There may be some room for improvement there, but we’re confident about summer 2020. I’ve actually recently driven the Model Y release candidate and think it’s going to be an amazing product and be very well received. I think it’s quite likely to — just my opinion, but I think it will outsell Model S, Model X and Model 3 combined.”

Disclaimer: We have no position in Tesla, Inc. (NASDAQ: TSLA) and have not been compensated for this article.