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Electric vehicle manufacturer Tesla is an interesting investment proposition. I own the shares myself, so I've been on that wild ride. I first bought shares at $17 each on 13 August 2010. They went from there to just under $380 in 2017, and closed at $250 last night, just before releasing their third quarter (Q3) results. (It is up a whopping 20% premarket this morning)
The Q3 numbers were amazing, and the stock is up over 20% after hours. Hooray! Revenue was in line with expectations at $6.3 billion for the quarter, but profits of $1.86 per share thrashed the consensus forecast of a loss of 42c per share.
Cash and cash equivalents rose $383 million to $5.3 billion, relieving pressure to do more equity raises. Third quarter vehicle production was 96 000 units. The production target for the full year is 360 000 cars, which looks like it will easily be exceeded. Costs are actually coming down and margins widening, as scale efficiencies kick in.
CEO Elon Musk said that the new Gigafactory in Shanghai is ahead of schedule, and trial production has started. It was literally built in 10 months and cost 65% less than their existing Model 3 production system in the US. Tesla also says it is in 'final stages' of its European site selection process. That new facility will produce both Model 3 and Model Y cars and production will begin in 2021. Tesla is taking on the major car companies in their own backyard!
As you know, Tesla is also a major player in the solar panel and energy storage (battery) business. Total storage deployment reached 477 MWh in Q3. They released something called the Tesla Megapack, which is a 3 MWh battery pre-assembled as a single unit. Solar installations have started to grow sequentially again and they deployed 43 MW of solar, 48% more than in the prior quarter.
I'll be holding my Tesla shares for many years to come, to see how all this turns out. One day all cars will be electric and solar-charged, and Tesla may well remain the market leader.
Here's another review of the results, from Bloomberg, via the Daily Maverick: Tesla Packs Profit Report With Positivity as Musk Breaks Mould.
