The electric-car maker earned $US2.90 a share, well above the $US0.15 loss per share expected by Wall Street analysts. It generated $US6.8 billion in sales, beating the $US6.3 billion that was anticipated.
The Model 3 sedan was a huge driver for the quarter.
“Q3 2018 was a truly historic quarter for Tesla,”the company said in a press release. “Model 3 was the best-selling car in the US in terms of revenue and the 5th best-selling car in terms of volume.”
The high price of Model 3 helped increase Tesla’s gross automotive margin, which resulted in an $US881 million free cash flow and $US3 billion cash in total for the quarter, the electric-auto maker said. Tesla admitted that its Model 3 weekly average production fell short of its target.
Nearly every analyst was impressed by Tesla’s ability to generate a profit. But they have mixed opinions about Tesla’s sustainability in the long term.
Here’s what Wall Street is saying about the quarter:
RBC Capital Markets
Price target: $US325 (from $US315)
“TSLA may have crossed the line to become self-funding,” said RBC analyst Joseph Spak.”But is it sustainable? Near-term probably yes. Longer-term more questions.”
He added: “While Tesla is a very innovative and disruptive company with strong growth ahead via disrupting large addressable markets, it is also a classic story stock that is difficult to value given that the investment decision is often qualitative rather than quantitative. Thus, near- to medium-term performance is likely to be determined by expectations and delivering on targets. While we are positive on the long-term opportunity, the stock appears to fairly balance medium-term assumptions with execution risk.”
Price target: $US309 (from $US299)
Price target: $US250 (from $US200)
Price target: $US225
“However, we believe the goals the company is putting forward now likely have less potential for upside surprise (targeting another quarter of positive FCF and a long-term Model 3 margins of 25%) and we question if we are going to see much better results than the company delivered. Further, we believe the strength the company saw this quarter was aided by higher priced Model 3 variants and believe the eventual $US35,000 price point on this vehicle may make it more difficult for TSLA to see similar tailwinds.”
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