Tesla Q3 Earnings Report Induces After Hours Stock Price Spike

While those bearish on Tesla Motors continue to make their case, its stock price surged by as much as 10 percent in after hours trading upon the news of its third quarter earnings.

Tesla has been busy, it’s continually in the news, and its stock does trade based on expectations that all this work is leading somewhere far greater than it is today.

Today’s more-positive-than-not news concerns the quarterly shareholder announcement for July through September in which Tesla reported adjusted (non-GAAP) earnings of $1.24 billion edging out analysts’ $1.21 billion estimate.

On an unadjusted (GAAP) basis, Tesla’s total revenue was reported at $937 million, down from Q2’s $955 million, but again, ahead of analysts expectations. It was also up from the Q3 one year prior which recorded $852 million.

Tesla’s losses however more than doubled with increased cash burn and research costs driving it to $229.9 million.

But Tesla is in growth mode, and among news discussed was its Gigafactory is set up to produce Powerwall batteries ahead of schedule.

"We have also accelerated plans to begin cell production for Tesla Energy products at the Gigafactory by the end of 2016. This is several quarters ahead of our initial plan." - Tesla shareholder letter.

“We have also accelerated plans to begin cell production for Tesla Energy products at the Gigafactory by the end of 2016. This is several quarters ahead of our initial plan.” – Tesla shareholder letter.

On the automotive front, it lowered guidance to 50,000-52,000 deliveries for this year, down from a former estimate of 55,000. It delivered the first few of its third vehicle, the Model X crossover during the third quarter, and projects deliveries to ramp up slowly in Q4.

Bearish reports have suggested Tesla’s projections are optimistic, but the carmaker’s shareholder letter forecasts steady deliveries.

SEE ALSO: Bob Lutz Foresees ‘Doom’ for Tesla, Suggests PHEV and Franchised Dealerships

“In Q4, we plan to build 15,000 to 17,000 vehicles, and deliver 17,000 to 19,000 vehicles, which will result in 50,000 to 52,000 total deliveries for the year,” said its letter.

Just as significantly, the carmaker has raised the bar for itself again for 2016, projecting more growth.

“Looking ahead, we still remain highly confident of average production and deliveries of 1,600 to 1,800 vehicles per week for Model S and Model X combined during 2016,” said Tesla’s letter.

"Since the Model X launch event, order rates have accelerated for both Model S and Model X. Although it is too early to draw firm conclusions, this supports our belief that Model X expands the market for Tesla vehicles, with little to no cannibalization of Model S." - Tesla shareholder letter.

“Since the Model X launch event, order rates have accelerated for both Model S and Model X. Although it is too early to draw firm conclusions, this supports our belief that Model X expands the market for Tesla vehicles, with little to no cannibalization of Model S.” – Tesla shareholder letter.

This could mean 83,000 to 94,000 vehicles to be delivered worldwide in 2016.

Coming back to the third quarter in question, Tesla said it delivered 11,603 cars, a bit ahead of forecasts and significantly ahead of 7,785 in the same quarter of 2014.

In miscellaneous other news, Tesla says it booked $39 million in zero emission vehicle credits, a sore point for some critics. This profit enabled under rules mandated by regulators goes straight to its bottom line of its balance sheet, and adds to around $600 million to date.

But in Q4, Tesla projects zero ZEV credit profits.

In related news on the financial front, Tesla announced new executives.

Jason Wheeler, hired away from Google, will be its new chief financial officer and Jon McNeill is to be its president of global sales and service.

Effective June 30, Wheeler will replace Deepak Ahuja, who announced retirement intentions earlier this year.

Jon McNeill is the former CEO of Enservio and had been named by the Boston Business Journal in 2013 “Most Admired CEO” in the small/midsize company category.

Growth Mode

Tesla stays in the news in part because it is assertively accomplishing things as a newcomer that no other automaker is at this juncture.

Its Model S is its present crown jewel product and has been updated since its June 2012 launch via OTA updates, and at the assembly line, a shuffling of models last year into this has seen introduction of all-wheel-drive variants – the 70D, 85D, P85/90D.

This has enabled the car to seem fresh whereas major manufacturers of top-selling plug-ins like the Chevy Volt and Nissan Leaf have seen sales wither this year for vehicles effectively cannibalized by the expectation of superior next-gen products. Not so for Tesla, which despite costing 2-4 times more has maintained sales volume on par with these ostensibly mass-market-focused cars.

Its latest significant update for Q3 saw Tesla release Autopilot semi-autonomous capability to 40,000 cars via over the air software updates.

"In China, our newest major market, Q3 Model S orders increased substantially from Q2, due in part to the opening of two new retail locations. We expect order growth in China to remain strong with more store openings and the recent policy changes in Beijing and other major cities that allow buyers of Tesla vehicles to bypass license plate restrictions."

“In China, our newest major market, Q3 Model S orders increased substantially from Q2, due in part to the opening of two new retail locations. We expect order growth in China to remain strong with more store openings and the recent policy changes in Beijing and other major cities that allow buyers of Tesla vehicles to bypass license plate restrictions.”

Tesla’s Gigafactory in Nevada is also going up to facilitate a major challenge of morphing from relative boutique maker to mass marketer with its Model 3, to have 200-plus mile range and cost $35,000 and up.

Yet to be shown, it may be by March 2016, and may be in production as soon as 2017 in time to offer an alternative to the 200-plus-mile Chevy Bolt hatchback due for production late next year, and potentially next-generation 200-mile-plus Nissan Leaf when it arrives.

And ever resourceful, in the process of developing batteries for cars, Tesla has found a new revenue and growth opportunity in its Tesla Energy division.

SEE ALSO: Tesla To Use LG Chem For Roadster Battery Upgrade

“Faced with growing demand for Powerpacks and Powerwalls, we have accelerated our plans to expand manufacturing capacity,” said Tesla’s shareholder letter. “In early Q4, we relocated production from Fremont to an automated assembly line at the Gigafactory. This positions us for strong growth in 2016, but the Gigafactory pull-ahead will push some Tesla Energy Q4 production and deliveries into Q1.”

“We are seeing very strong demand for Tesla Energy products globally, and particularly in Australia, Germany and South Africa,” continued Tesla. “To respond to these opportunities, we are growing our worldwide Tesla Energy sales team and are continuing to sign new business partnerships with utilities and energy companies.”

Never Drama Free

Meanwhile various watchers invoke a variety of criticisms upon Tesla, ranging from a perceptibly inflated stock price, to a checkered profit history, the fact its businesses have benefitted highly from subsidies and still mainly benefit the financially better off, and more.

Critics, including those who play short-selling strategies, and others with viewpoints hoping to see, or otherwise predicting Tesla’s failure continue to post their perspectives.

Model S11

For its part, the company says it is working a large-scale plan in the face of an entrenched paradigm to ultimately shift the transportation sector away from petroleum.

Its cars do now cost a subsidy eligible $76,200 to over $145,000 putting them out of reach for many. And, the stock took a tumble from a high of $282 in July to a low of $206 in October after Consumer Reports ceased to recommend Model S after 1,400 respondents offered sufficient negative feedback on quality.

SEE ALSO: Consumer Reports Downgrades Tesla Model S To ‘Below Average’ Reliability

The cars and company itself however continue to engender fierce owner loyalty, as Tesla is known for very proactive service.

Really, for every point, there is a counterpoint that someone somewhere has made.

And despite any naysayers, it is an understatement to say Tesla has endeared many devoted fans wanting to see the “disruptive” company succeed, including some on Wall Street predicting this will be the case.

So far Tesla has delivered more perceived good with any perceived bad, and soon, it is hoped, many more people may finally be able to get their Tesla.

For those not ready to shell out more than double the average new U.S. car price on a Model S or Model X, the Model 3 is a major goal in sight.

Always controversial, Tesla has inspired envy, admiration, love, and hate. Its latest Q3 report just continues the drama.